Absa Group Limited

ABSA GROUP LIMITED

Financial results For the year ended 31 December 2007 GROUP PERFORMANCE Financial highlights 1 Share performance 2 Shareholders’ information 3 Shareholders’ diary 4 Group salient features 5 Group financial reporting structure 6 Profit and dividend announcement 8 58 11 BUSINESS UNIT PERFORMANCE PERFORMANCE INDICATORS Profit contribution by business area 58 Headline earnings 11 Segmental reporting per market segment 59 RoE decomposition 12 Retail banking 63 • Return on average equity 13 Bancassurance operations 64 • Net interest yield 14 • Balance sheet 64 Loans and advances to customers 15 • Income statement 65 Market share 16 • Other information 67 Deposits due to customers 17 Commentary 68 • Non-interest income 18 • Impairment losses on loans and advances 20 • Operating expenditure 21 70 • Return on average assets 23 RESTATEMENT OF PRIOR YEAR FIGURES • Net asset value 24 Group balance sheet – 31 December 2006 70 Primary statements 28 Group income statement – year ended Capital adequacy 53 31 December 2006 71 Definitions 55 Commentary 72

73 PRESENTATION TO THE IAS aia dqay 53 28 Deﬁnitions 55 Capital adequacy Primary statements g g g g g

ru ain etrs 5 4 8 2 6 3 1 g g RoE decomposition Headline earnings Performance indicators Proﬁt anddividendannouncement Group ﬁnancialreportingstructure Group salientfeatures Shareholders’ diary Shareholders’ information Share performance Financial highlights CONTENTS PERFORMANCE GROUP

Net assetvalue Return onaverageassets Operating expenditure Impairment lossesonloansandadvances Non-interest income Net interestyield Return onaverageequity Deposits duetocustomers Market share Loans andadvancestocustomers 16 24 11 14 12 18 21 13 23 17 15 20

GROUP PERFORMANCE Financial highlights Year ended 31 December

2007 2006 Total assets R640,9 billion R495,1 billion Headline earnings R9 413 million R7 872 million Market capitalisation R75,3 billion R84,1 billion Number of employees 36 893 35 154 Number of customers (South Africa) 9,0 million 8,4 million Number of staffed outlets (South Africa) 892 759 Number of ATMs (South Africa) 7 693 7 053

(%!$,).%%!2.).'30%23(!2% Year ended (cents) 1 181,8 954,8 827,2 688,5

30,4% 20,1% 15,4% 23,8%

Mar Mar Dec Dec $EC 2004 2005* 2005** 2006

$)6)$%.$30%23(!2% Year ended (cents) 473,0 295,0 295,0 182,0

25,5% 62,1% -% 60,3%

Mar Mar Dec Dec $EC 2004 2005* 2005*** 2006

*** The comparatives for March 2005 have been restated for International Financial Reporting Standards (IFRS) throughout the document. Only the December 2006 comparatives have been adjusted for the restatements and reclassifications mentioned on pages 70 – 72. *** Pro forma figures (twelve months). *** For the nine months ended 31 December 2005.

Absa Group Limited Financial results for the year ended 31 December 2007 Share performance

3(!2%0%2&/2-!.#% Period ended (cents)

11 100 35 875,62

10 100 29 234,48 Jul 06 *UL Apr 06 Oct 06 Jan 06 Jun 06 /CT Mar 06 !PR Feb 06 *AN Nov 06 Dec 06 &EB -AR *UN Aug 06 Sep 06 3EP $EC May 06 .OV !UG -AY

Absa Banks’ index

**Absa’s annualised total return for the year ended 31 December 2007 was -6,8%.

Share performance on the JSE Limited Year ended 31 December

2007 2006

Number of shares in issue* 678 573 074 671 955 074 Market prices (cents per share): • closing 11 100 12 510 • high 14 830 12 615 • low 10 832 9 650 • average 13 207 10 944 Closing price/net asset value per share (excluding preference shares) 2,00 2,65 Closing price/headline earnings per share 7,9 10,6 Volume of shares traded (millions) 343,7 332,3 Value of shares traded (R millions) 45 370,6 35 925,7 Market capitalisation (R millions) 75 321,6 84 061,6

*Includes 2 678 159 shares held by the Absa Group Limited Share Incentive Trust (December 2006: 2 654 828), 718 202 shares held by Absa Life Limited and Absa Fund Managers Limited (December 2006: 178 370) and 68 800 shares held by the Absa Group Limited Employee Share Ownership Administration (ESOP) Trust (December 2006: 0).

Absa Group Limited Financial results for the year ended 31 December 2007 Shareholders’ information As at 31 December

2007 2006 % %

Major ordinary shareholders (top 10)* Barclays Bank PLC 58,8 56,5 Allan Gray Limited 6,8 6,7 Public Investment Corporation 6,1 4,8 Old Mutual Asset Managers 4,3 3,3 Sanlam Investment Management 2,0 2,3 Stanlib Asset Management 1,8 2,0 Coronation Fund Managers 1,8 2,7 AXA Financial SA (Bernstein and Alliance) 1,1 1,8 Absa Stockbrokers (Proprietary) Limited 1,0 0,9 Foord Asset Management 0,9 n/a Capital Group Companies Inc. n/a 1,9 Investec Asset Management n/a 3,1 Other 15,4 14,0 100,0 100,0

Geographical England and Wales 59,3 57,3 South Africa 32,9 31,8 United States 3,1 5,5 Other countries 2,6 3,2 Below threshold 2,1 2,2 100,0 100,0

*Owing to the Barclays acquisition of a controlling stake in Absa, only the top 10 shareholders are disclosed.

Batho Bonke Capital (Proprietary) Limited and the Absa Group Limited Employee Share Ownership Administrative Trust (ESOP) hold 75 619 500 redeemable cumulative option-holding preference shares (preference shares).

Ordinary Preference Total shares shares shares

Number of shares in issue at 31 December 2007 678 573 074 75 619 500 754 192 574

Number of shares in issue at 31 December 2006 671 955 074 79 237 500 751 192 574

Absa Group Limited Financial results for the year ended 31 December 2007 Shareholders’ diary

Financial year-end 31 December 2007

Announcements Announcement of the final results 19 February 2008 Announcement of the interim results* 7 August 2008

Dividends

Declaration Last day Ex dividend Record Payment Dividend date to trade date date date Final 19 February 7 March 10 March 14 March 17 March December 2007 2008 2008 2008 2008 2008 Interim 7 August 22 August 25 August 29 August 1 September June 2008* 2008 2008 2008 2008 2008

*Subject to change.

Absa Group Limited Financial results for the year ended 31 December 2007 Group salient features Year ended 31 December

2007 2006* Change (Audited) (Audited) % Income statement (Rm) Headline earnings** 9 413 7 872 19,6 Profit attributable to ordinary equity holders of the Group 9 595 8 105 18,4 Balance sheet (Rm) Total assets 640 909 495 112 29,4 Loans and advances to customers 455 958 373 825 22,0 Deposits due to customers 310 512 279 848 11,0 Financial performance (%) Return on average equity 27,2 27,4 Return on average assets 1,68 1,74 Operating performance (%) Net interest margin on average assets 3,37 3,28 Net interest margin on average interest-bearing assets 3,83 3,72 Impairment losses on loans and advances as % of average loans and advances to customers 0,58 0,45 Non-performing advances as % of loans and advances to customers 1,6 1,3 Non-interest income as % of total operating income 47,0 50,2 Cost-to-income ratio 51,8 53,8 Effective tax rate, excluding indirect taxation 28,7 27,6 Share statistics (million) Number of shares in issue 678,6 672,0 Weighted average number of shares 671,5 666,1 Weighted average diluted number of shares 716,4 703,2 Share statistics (cents) Earnings per share 1 428,9 1 216,8 17,4 Diluted earnings per share 1 341,4 1 154,4 16,2 Headline earnings per share 1 401,9 1 181,8 18,6 Diluted headline earnings per share 1 316,1 1 121,3 17,4 Dividends per ordinary share relating to income for the year 560,0 473,0 18,4 Dividend cover (times) 2,5 2,5 Net asset value per share 5 537 4 717 17,4 Tangible net asset value per share 5 493 4 682 17,3 Capital adequacy (%) Absa Bank 12,5 12,3 Absa Group 13,1 13,1

*Refer to pages 70 – 72 for the restatement and reclassification of prior year figures. **After allowing for R313 million (December 2006: R73 million) profit attributable to preference equity holders of the Group.

Absa Group Limited Financial results for the year ended 31 December 2007 Group financial reporting structure

Absa Group Limited

RETAIL COMMERCIAL INVESTMENT BANKING BANKING BANKING

Absa Private Bank Absa Corporate and Absa Capital Business Bank (ACBB) Personal Bank (includes Digital Banking, Absa Development Micro Lending, Personal Company Holdings (ii) Bank Ventures and (Proprietary) Limited Alliances, Small Business, Telephone Banking and Entry Level Banking)

Absa Home Loans (includes Repossessed Properties)

Absa Card

Absa Vehicle and Asset Finance (AVAF)

AllPay Consolidated Investment Holdings (Proprietary) Limited(i)

CHANGES IN GROUP FINANCIAL REPORTING STRUCTURE (i)AllPay Consolidated Investment Holdings (Proprietary) Limited was moved from “Other Group activities” to “Retail banking” during the year under review. (ii)Absa Development Company Holdings (Proprietary) Limited was moved from “Other Group activities” to “Commercial banking” during the year under review. (iii)Banco Austral, Sarl (Mozambique) has changed its name to Barclays Bank Mozambique during the year under review. (iv)Disposed of the entire 48,5% interest in CBZ Holdings Limited during the year under review. (v)Absa Bank London excludes portions allocated to ACBB, Absa Capital and African operations.

Absa Group Limited Financial results for the year ended 31 December 2007 AFRICAN OTHER GROUP BANCASSURANCE OPERATIONS ACTIVITIES

Barclays Bank Insurance Other companies Mozambique(iii) Absa Life Limited Real Estate Asset Management (excludes National Bank of Absa Insurance Company Repossessed Properties) Commerce Limited (NBC) Limited (Tanzania) Investments International operations Absa Bank London (v) CBZ Holdings Limited Absa Fund Managers Limited (Zimbabwe)(iv) Absa Mortgage Fund Banco Comercial Angolano Managers (Proprietary) (Angola) Limited Absa Stockbrokers (Proprietary) Limited Absa Investment Management Services (Proprietary) Limited Absa Asset Management (Proprietary) Limited and Portfolio Managers (Proprietary) Limited Fiduciary Absa Trust Limited Absa Consultants and Actuaries (Proprietary) Limited Absa Health Care Consultants (Proprietary) Limited Other Absa Brokers (Proprietary) Limited Absa Manx Insurance Company Limited Absa Syndicate Investments Holdings Limited

Absa Group Limited Financial results for the year ended 31 December 2007 Profit and dividend announcement

Overview The Group increased headline earnings by 19,6% to R9 413 million, compared with headline earnings of R7 872 million for the year ended 31 December 2006 with strong contributions from commercial and investment banking. Headline earnings per share increased by 18,6% to 1 401,9 cents per share and fully diluted headline earnings per share grew by 17,4% to 1 316,1 cents per share. The dilution in headline earnings per share flows from the option rights to obtain shares that have been issued to Batho Bonke Capital (Absa’s black economic empowerment partner) and the Group’s share incentive schemes. The Group recorded a return on average assets of 1,68% for the year (2006: 1,74%) and a return on equity of 27,2% (2006: 27,4%). A final dividend of 320 cents per share has been declared, bringing the total dividend for the year to 560 cents per ordinary share. This is up 18,4% from the 473 cents per share declared in respect of the year ended 31 December 2006 and represents a dividend cover of 2,5 times. The key features of the Group’s performance for 2007 include: • advances growth of 22,0%; • top-line income growth of 19,1%; • an increase in the proportion of earnings from commercial and investment banking; • improved operational efficiency; and • an increase in retail credit impairment charges.

Operating environment Despite mounting global uncertainties, the South African economy remained resilient in 2007, bolstered by strong commodity prices and favourable foreign financing. Economic growth is likely to have remained near 5% and this has underpinned solid growth in the financial services industry. When compared with the last three years, there have been important structural shifts in the nature of growth during 2007, with the consumption-led impulse of recent years slowing and investment-led growth pushing to the fore.

Absa was well positioned to leverage off this shift, as is evidenced from the strong earnings growth posted in both commercial and investment banking. Inflation has emerged as an important concern, with CPIX rising above the South African Reserve Bank’s (SARB) 6% upper target in April and ending the year at 8,6%. This prompted a further 200 basis points in interest rate increases, on top of the 200 basis points delivered during 2006. The prime rate increased to 14,5% by the end of 2007, as compared to 10,5% in May 2006. As a consequence of higher debt servicing costs, consumer spending and credit extension have both moderated, particularly during the second half of 2007 as credit conditions for some households tightened further with the introduction of the National Credit Act.

Absa Group Limited Financial results for the year ended 31 December 2007 Group performance Information on the Group performance, net asset value and capital adequacy is contained on pages 11 – 57. Information relating to the performance of the Group’s segments is contained on pages 58 – 69.

Basis of presentation and changes in accounting policies The Absa Group’s annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).

The Group adopted IFRS 7 – Financial Instruments: Disclosures and IAS 1 Presentation of Financial Statements: Capital Disclosures (amendment) during the year ended 31 December 2007. The adoption of IFRS 7 and the amendment to IAS 1 impacted disclosures made in the financial statements. The Group also made some reclassifications in the income statement as a result of the implementation of IFRS 7. The adoption of the standard had no impact on the reported profits or financial position of the Group.

The Group’s results for the year ended 31 December 2007 have been audited by the Group’s auditors, PricewaterhouseCoopers Inc. and Ernst & Young Inc. Their audit report is available for inspection at the Group’s registered address, 3rd Floor, Absa Towers East, 170 Main Street, Johannesburg, 2001.

Prospects Global uncertainties will continue to impact on financial markets and the banking environment in 2008. South Africa’s large and rising current account deficit, in particular, leaves key financial markets exposed to the sentiment of foreign money managers. There are new domestic challenges as well. Recent disruptions to electricity supply, and the clear need to lower electricity demand, present a major challenge to business, particularly the energy dependent mining and manufacturing sectors. This is likely to lead economic growth lower, particularly in the first half of 2008. Inflation, already high, looks likely to face further upward pressure in the near-term before beginning a downward trajectory later in the year. However, interest rates are expected to remain at current levels for much of the year. Household indebtedness, coupled with the increased cost of credit, will continue to impact on affordability, resulting in a more moderate growth in advances and may lead to a further increase in the impairment charge. On the other hand, record high commodity prices, particularly in precious metals, will help offset some of the impact felt in these sectors arising from the electricity supply problems. More generally, buoyant public and private investment spending looks likely to continue in 2008, not only helping to improve South Africa’s long- term growth potential, but also mitigating downside risks to economic growth in the near-term and to support corporate and commercial lending and investment banking activities.

The resilience of the Group will be tested in 2008. Strategies and action plans are in place to address with these challenges and opportunities going forward.

On behalf of the board

G Marcus S F Booysen Chairperson Group Chief Executive

19 February 2008

Absa Group Limited Financial results for the year ended 31 December 2007 Declaration of final ordinary dividend number 43 Shareholders are advised that a dividend of 320 cents per ordinary share has been declared on Tuesday, 19 February 2008, and is payable to shareholders recorded in the register of members of the Group at the close of business on Friday, 14 March 2008.

In compliance with the requirements of Strate, the electronic settlement and custody system used by the JSE Limited, the following salient dates for the payment of the dividend are applicable:

Last day to trade cum dividend Friday, 7 March 2008 Shares commence trading ex dividend Monday, 10 March 2008 Record date Friday, 14 March 2008 Payment of dividend Monday, 17 March 2008

Share certificates may not be dematerialised or rematerialised between Monday, 10 March 2008, and Friday, 14 March 2008, both dates inclusive.

On Monday, 17 March 2008, the dividend will be electronically transferred to the bank accounts of certificated shareholders who use this facility. In respect of those who do not, cheques dated 17 March 2008 will be posted on or about that date. The accounts of those shareholders that have dematerialised their shares (which are held at their central securities depository participant or broker) will be credited on Monday, 17 March 2008.

Please refer to the financial results announcement of Absa Bank Limited and its subsidiaries for further information pertaining to the dividend for the non-cumulative, non-redeemable preference shares.

On behalf of the board

S Martin Group Secretary

19 February 2008

Absa Group Limited Financial results for the year ended 31 December 2007 Performance indicators

Headline earnings

Objective: Achieve real headline earnings growth of 10%.

(%!$,).%%!2.).'3 Year ended (Rm) 7 872 6 282 5 394 4 447

29,2% 21,3% 16,5% 25,3%

Mar Mar Dec Dec $EC 2004 2005 2005* 2006

0ROFORMAFIGURESTWELVEMONTHS

PERFORMANCE The Group increased headline earnings by 19,6%, compared to December 2006, to R9 413 million. This growth outperforms the Group’s objective of delivering real headline earnings growth of 10%.

All banking business segments delivered a strong performance, compared to December 2006, with Retail banking growing attributable earnings by 20,1% and Absa Corporate and Business Bank (ACBB) and Absa Capital reflecting growth of 38,9% and 55,4% respectively. ACBB and Absa Capital increased their earnings contribution from 30,1% to 35,4%, in line with the Group’s focus on improved diversification of its income streams.

These performances are underpinned by solid advances growth and transaction volumes. The Group tightened its credit criteria at the expense of market share to protect the quality of its book. This assisted the Group to maintain the credit impairment charge to within acceptable levels.

Absa Capital’s growth was underpinned by excellent performances in Primary Markets, Secondary Markets and Equity Investments and Investor Services.

Absa’s bancassurance operations posted attributable earnings of R1 502 million for 2007. The flat attributable earnings growth resulted mainly from the buoyant equity market performance achieved in 2006 which was not repeated in 2007. At an operating level, bancassurance produced growth of 9,0%, mainly attributable to continued new business growth and significant growth in assets under management.

Absa Group Limited Financial results for the year ended 31 December 2007 In order to obtain a thorough understanding of factors contributing to the Group’s performance, a RoE decomposition is provided below. The main components of the decomposition are discussed in the commentary that follows.

RoE decomposition* Year ended 31 December

2007 2006 Notes % % Net interest/interest-bearing assets 3,83 3,72 multiply multiply Interest-bearing assets/total assets 0,88 0,88 equals equals Net interest yield 2 3,37 3,28 plus plus Non-interest yield 3 2,98 3,32 equals equals Gross yield 6,35 6,60 less less Impairment losses 4 0,43 0,35 equals equals Risk-adjusted yield 5,92 6,25 less less Operating expenditure 5 3,30 3,56 less less Taxation expense 0,85 0,89 plus plus Share of retained earnings of associated undertakings and joint ventures 0,02 0,03 less less Minority interest 0,08 0,04 less less Headline earnings adjustments 0,03 0,05 equals equals Return on average assets (RoA) 6 1,68 1,74 multiply multiply Gearing (average assets/average equity) 7 16,19 15,76 equals equals Return on average equity (RoE) 1 27,2 27,4

*Calculated as a % of average total assets.

Absa Group Limited Financial results for the year ended 31 December 2007 1. Return on average equity

Objective: Maintain an RoE of at least 5% above the cost of equity. 2%452./.!6%2!'%%15)49 Year ended (%) 27,4 25,6 25,3 24,6

Mar Mar Dec Dec $EC 2004 2005 2005* 2006

0ROFORMAFIGURESTWELVEMONTHS

PERFORMANCE The Group achieved a return on average equity (RoE) of 27,2% for the year under review. The pleasing result has enabled the outperformance of the Group’s objective of achieving an RoE of at least 5% above the Group’s cost of equity.

Absa Group Limited Financial results for the year ended 31 December 2007 2. Net interest yield

The drivers of the net interest yield are interest earned on advances and the cost of funding.

Interest income

.%4).4%2%34).#/-% Year ended (Rm and % growth) 14 887 11 810 10 431 9 718

10,0% 7,3% 22,8% 26,1%

Mar Mar Dec Dec $EC 2004 2005 2005* 2006

0ROFORMAFIGURESTWELVEMONTHS ANDGROWTHCALCULATEDON$ECEMBERFIGURESPROFORMATWELVEMONTHS

PERFORMANCE The Group’s net interest income grew strongly from R14 887 million for the year ended 31 December 2006 to R18 890 million for the year ended 31 December 2007. Net interest income benefited from strong advances growth, albeit at a slower rate than that achieved for 2006. Loans and advances to customers increased by 22,0% from 31 December 2006. The growth in advances was largely supported by high growth in mortgages, credit cards and commercial property finance.

.%4).4%2%34-!2'). Year ended (%)

3,87 3,70 3,65 3,72

3,40 3,25 3,28 3,28 3,04 2,94 2,85 2,73

Mar Mar Dec Dec $EC 2004 2005 2005* 2006

Net interest margin – daily average total assets Net interest margin – average interest-bearing assets Net interest margin – after impairment losses on loans and advances 0ROFORMAFIGURESTWELVEMONTHS

The Group’s net interest margin in respect of average assets improved to 3,37% for the year under review, compared with 3,28% for the 2006 year. Net interest income grew strongly on the back of improved margins and good growth in major advances products. The improvement in the net interest margin stems largely from the higher interest rate environment and greater net flows in capital and rate-insensitive retail deposits. Funding costs increased, reflecting higher wholesale funding levels and the reluctance of depositors to lengthen the tenure of their deposits in a rising interest rate environment.

Absa Group Limited Financial results for the year ended 31 December 2007 Loans and advances to customers

NET ADVANCES

Year ended (Rbn) 328,6 275,2 216,8 70,4 56,1 53,0 42,9 38,8 30,1 6,6 3,4 2,3 1,8 1,4 0,6

Dec Dec Dec 2005* 2006 2007 Retail banking ACBB Absa Capital Africa Other

*The comparatives for December 2005 have been reclassified for Abacas and equity and shareholder loans.

LOANS AND ADVANCES MIX (%) Period Retail banking ACBB Absa Capital Africa Other

Dec 2005 72,6 14,4 10,2 0,6 2,2 Dec 2006 73,6 15,0 10,4 0,6 0,4

Dec 2007 72,2 15,4 11,6 0,7 0,1

PERFORMANCE

Net advances to customers increased by 22,0% to R455 958 million, compared to 31 December 2006, with Retail banking, Absa Corporate and Business Bank (ACBB) and Absa Capital advances showing growth of 19,4%, 25,3% and 36,6% respectively. However, advances growth has started to show signs of a slowdown, owing to the impact of higher interest rates and rising oil and food prices on consumer spending.

The growth in retail advances continues to be driven by increased household credit extension. Mortgage advances grew by 21,9% and credit cards by 23,0%. Sound advances growth continues to be experienced in the affluent and high net worth market, with Absa Private Bank increasing their advances base by 17,0%.

The lower growth experienced in the instalment finance book of 12,2% can be attributed to slower growth in new motor vehicle sales and continued price pressure in the used vehicle market. Strategic alliances with key suppliers and manufacturers continue to contribute to the solid asset growth and is in line with AVAF’s strategy to diversify its asset mix and target the corporate and business markets.

Both the large and medium business segments in ACBB drove advances growth. The strong property market remained a solid contributor to the 25,3% total advances growth in ACBB, with Commercial Property Finance advances reflecting growth of 31,9%.

Refer to note 1 of the financial statements on page 36 of this report for further information about the Group’s advances.

Absa Group Limited Financial results for the year ended 31 December 2007 Market share December 2007/December 2006 (%)

-/24'!'%,/!.3 #2%$)4#!2$3

/2,6% /5,2% /31,9%* /25,6% /12,0%

/20,2%

/23,8%

/17,1%

/25,6% /36,0%

).34!,-%.4&).!.#% /6%2$2!&43!.$/4(%2,/!.3

/1,5%

/24,4%** /17,3% /19,8% /20,1%

/24,3% /19,0% /33,1% /20,9%

/19,6%

Absa Group Standard Bank Group FirstRand Nedbank Group Other

3ECURITISATIONOF2 BILLIONn OFMARKETSHARE$ECEMBER2BILLION HASBEENEXCLUDEDFROMTHE!BSAMORTGAGELOANBOOK 3ECURITISATIONOF2 BILLIONn OFMARKETSHARE$ECEMBER2 BILLIONn OFMARKETSHARE HASBEENEXCLUDEDFROMTHE!BSAINSTALMENTFINANCEBOOK

PERFORMANCE The Group marginally lost market share in all products except overdrafts and other loans in favour of credit quality. Management is confident that this was the correct strategy taking into account the macro economic environment and a significant driver of the lower credit impairment ratio relative to the peers.

Absa Group Limited Financial results for the year ended 31 December 2007 Deposits due to customers 4/4!,$%0/3)43 Year ended (Rbn) 126,2 102,9 80,9 71,6 67,7 59,3 6,0 4,9 4,1 0,1

Dec Dec $EC 2005* 2006 Retail banking ACBB Absa Capital Africa Other

*The comparatives for December 2005 have been reclassified for debt securities in issue.

Total funding (%) Dec 2007 Dec 2006 Dec 2005 Deposits due to customers 59,1 69,3 74,0 • Retail banking 18,4 20,0 21,7 • ACBB 14,5 16,8 18,0 • Absa Capital 24,9 31,3 31,2 • Africa 1,2 1,2 1,2 • Other 0,1 — 1,9 Deposits from banks 11,1 6,2 5,5 Debt securities in issue 29,8 24,5 20,5 100,0 100,0 100,0

PERFORMANCE

The Group’s deposit base was bolstered by strong growth in the Absa Corporate and Business Bank (ACBB) deposit book of 12,7% and, in particular, strong growth in public sector deposits aiding efforts to diversify its deposit base.

Retail banking’s deposit base has grown 19,9%, compared to 31 December 2006. Savings accounts continue to be a major draw-card for new customers and the introduction of a new savings product to compete with money market unit trust proved popular. Wholesale deposits have shown year-on-year growth of only 3,5%, with the Group focusing on debt securities with a longer tenure to lengthen its funding maturity profile. This represents an improvement on 2006 growth, but lower than advances growth and the increased reliance on wholesale funding remains.

The Group gained market share in savings, medium-term and transmission deposits, assisted by a growth in client numbers and innovative new products.

Absa Group Limited Financial results for the year ended 31 December 2007 3. Non-interest income

Objective: Maintain non-interest income at approximately 50% of top-line income.

./. ).4%2%34).#/-%!3/&/0%2!4).').#/-%EXCLUDINGIMPAIRMENTLOSSESONLOANSANDADVANCES Year ended (%) 53,8 53,8 52,5 50,2

Mar Mar Dec Dec $EC 2004 2005 2005* 2006

0ROFORMAFIGURESTWELVEMONTHS PERFORMANCE Non-interest income as a percentage of total income reduced to 47,0% for the year under review, but was adversely affected by the impact of IFRS 7 reclassifications. The increase in transaction volumes was supported by a growth of 7,1% in the customer base to 9 million and the deployment of additional delivery channels. An additional 133 points of presence, 640 ATMs, 155 self-service kiosks and 148 internet kiosks were installed during 2007.

The growing customer base and increased delivery channels contributed to increased transactional volumes in Retail banking and Absa Corporate and Business Bank. As a result, net fee and commission income, regarded as annuity income and constituting more than two thirds of non-interest income, increased by 14,3% to R11 600 million (2006: R10 153 million). Strong growth in advisory fees by Absa Capital also contributed to the increase in fee and commission income. Absa has again maintained price increases at well below the ruling inflation rate.

Absa Capital experienced good growth in non-interest income through strong performances from the income generating activities of Equity Investments and Investor Services, Secondary Markets and Primary Markets. This was partially offset by lower income from the commercial property equity portfolio in Absa Corporate and Business Bank, down from R337 million to R318 million (including R60 million profit on sale of property in the current year).

Short-term insurance premiums grew by 21,2% and related claims increased by 23,7%. Long-term insurance premiums decreased by 9,7%, mainly as a result of the impact of the National Credit Act, in terms of which single premiums were changed to recurring premiums.

In addition to this, new business volumes for both the Group’s insurance operations remained strong and the asset management businesses posted solid gains, fuelled by a 20,2% growth in assets under management to R123,7 billion, compared to 31 December 2006.

Absa Group Limited Financial results for the year ended 31 December 2007 ).4%2.%4!.$4%,%0(/.%"!.+).' Year ended (Customers) 696 831 633 933 608 625 604 884 550 773 529 873 458 017 445 690

Mar Mar Dec Dec $EC 2004 2005 2005 2006 Internet banking Telephone banking The Group’s electronic banking base continues to show growth from a high base. Internet and telephone banking customers increased by 14,4% and 3,0% respectively since 31 December 2006.

Absa Group Limited Financial results for the year ended 31 December 2007 4. Impairment losses on loans and advances )-0!)2-%.4,/33%3 Year ended (%)

3,8 0,52 0,90 2,2 1,8 0,45 1,3 0,31

Mar Mar Dec Dec $EC 2004 2005 2005* 2006

Impairment of advances ratio Non-performing advances ratio 0ROFORMAFIGURESTWELVEMONTHS

PERFORMANCE Credit impairments have continued to rise from the cyclical low experienced over the last three reporting periods. The Group’s impairment ratio (income statement charge as a percentage of average customer advances) increased from 0,45% for the twelve months ended 31 December 2006 to 0,58% for the current year. The higher loss ratio resulted from increased delinquencies in the retail book and was offset to some degree by low impairments in the corporate and business banking operations. The Group implemented a more conservative approach to its retail banking scorecards and is enhancing collection strategies to counter the risk associated with the current credit cycle.

While impairments of the retail operations increased sharply, the impairment loss ratio is well within the long- term industry average. Although consumers are under increasing pressure, impairment charges have been somewhat curtailed by an increased focus on the collection process and the timely revision of credit criteria. Impairments in the commercial sector have remained low as the impact of higher interest rates has a tendency to lag for a longer period for these customers.

Legislative developments – National Credit Act (NCA) The NCA was promulgated on 13 March 2006 and implemented on 1 June 2007. It is the Group’s view that this legislation will benefit and protect consumers. The Group has amended its systems and processes to ensure a responsible and consistent approach in interactions with customers and to maintain an audit trail of its engagements with customers. The direct costs associated with compliance amounted to approximately R100 million.

The Group aims to continue refining processes and technology solutions to bring about greater efficiencies and to identify opportunities for product development and improvements in the Group’s customer relationship model. Absa remains committed to full compliance with the NCA’s requirements and to supporting its intent. The Group participates actively in initiatives to improve customer education in an effort to prevent over-indebtedness.

Absa Group Limited Financial results for the year ended 31 December 2007 5. Operating expenditure

Objective: Drive down the cost-to-income ratio towards 50%.

COST-TO-INCOME RATIO

Year ended (%)

57,1 56,6 57,0

53,8 19,1 51,8 18,0 14,6 14,2 14,0 13,2 12,1 10,4 9,5 8,3

Mar Mar Dec Dec Dec 2004 2005 2005* 2006** 2007 Top-line income growth Operating expenses growth Cost-to-income ratio *Pro forma figures (twelve months). **Growth calculated on December 2005 figures (reclassified for IFRS 7).

PERFORMANCE Revenue growth of 19,1% exceeded cost growth and drove down the cost-to-income ratio from the 53,8% recorded for 2006 to 51,8% for 2007. The Group’s objective is to achieve a cost-to-income ratio of around 50%. The past year has seen a strong focus on efficiency improvement initiatives and the Group has embraced the Lean approach. This ensures that knowledge held at all levels of staff is used to effect process improvements, improving customer service and removing unnecessary procedures. During the year under review, the Group increased its staff complement by 1 739 to cater for increased business growth and to staff new distribution outlets. Staff salary increases were higher than inflation and incentive awards were lifted by 20,9% on the back of the good financial performance. Marketing spend (including synergies) to support the Group’s growing business increased by 24,8% and cash transportation costs increased by16,4%.

The Absa-Barclays integration programme delivered a sustainable increase in profit before tax of R1 428 million The objective of this programme was to improve profit before tax by R1,4 billion by implementing best practices applied by Barclays. The Group is pleased to report that this target was achieved by year-end, 18 months ahead of plan. Actual sustainable synergies as at 31 December 2007 were R1 428 million comprising R698 million of revenue- generated synergies and R730 million in cost savings. The benefits were achieved in the following areas: • Customer value interventions in the retail operations; • The creation of a competitive investment bank; • Best-practice sourcing, which includes leveraging off the global supplier contracts of Barclays; and • The implementation of a new customer-centric operating model in ACBB, improving the quality and speed of credit decisions and enabling relationship managers to improve the profitability of customers by focusing on the provision of more appropriate solutions. Over the past year, a further R675 million was expended on hiring the top available talent, implementing best practice methodologies and improving systems and processes. Since the inception of the programme, the total expenditure incurred to facilitate these savings amounted to R1,6 billion. Further expenses are expected to be incurred in 2008 to bring the total one-off investment to deliver these benefits to R1,8 billion. Absa and Barclays will continue to share ideas and best practices to deliver further benefits to shareholders to improve the competitiveness of the franchise.

Absa Group Limited Financial results for the year ended 31 December 2007 DELIVERY FOOTPRINT

Year ended (Quantity) 4 047 3 753 3 646 3 465 3 300 3 142 2 816 2 370 1 936 1 686 892 759 732 689 682 113 86 96 88 83

Mar Mar Dec Dec Dec 2004 2005 2005 2006 2007

Outlets Absa-owned ATMs* Non-Absa-owned ATMs* African subsidiary outlets *South Africa Absa remains committed to investing in its delivery footprint, with an emphasis on a presence in rural and previously disadvantaged communities. The focus is on optimising the outlet network and striking a balance between traditional outlets and alternative/electronic delivery mechanisms.

ATMs Dec 2007 Dec 2006 Absa-owned 4 047 3 753 Branch ATMs 1 790 1 758 Remote ATMs 2 005 1 749 Corporate ATMs 20 20 Franchise ATMs 232 226 Non-Absa-owned 3 646 3 300 7 693 7 053

%-0,/9%%#/-0,%-%.4* Year ended (Employees) 35 154 33 543 32 515 31 658

Mar Mar Dec Dec $EC 2004 2005 2005 2006

4HEEMPLOYEECOMPLEMENTFIGURESEXCLUDECONTRACTWORKERS

Staff-related costs grew by 19,3% (compared to December 2006) and represent 54,9% of the cost base. The key drivers of this increase included headcount growth to support expansion, service initiatives and compliance requirements. In addition, above inflation wage settlements and higher incentive provisions owing to the Group’s strong performance contribute to the increase.

Absa Group Limited Financial results for the year ended 31 December 2007 (%!$,).%%!2.).'30%2%-0,/9%%!6%2!'% Year ended (R’000) 229,2 190,2 168,1 138,9

36,6% 21,0% 13,1% 20,5%

Mar Mar Dec Dec $EC 2004 2005 2005* 2006

0ROFORMAFIGURESTWELVEMONTHS

The continued increase in headline earnings per employee, despite headcount and cost growth, demonstrates the Group’s ability to leverage existing infrastructure and resources.

6. Return on average assets

Objective: Maintain an RoA of 1,5%. 2%452./.!6%2!'%!33%43 Year ended (%) 1,74 1,72 1,65 1,55

Mar Mar Dec Dec $EC 2004 2005 2005* 2006

0ROFORMAFIGURESTWELVEMONTHS

PERFORMANCE The return on average assets (RoA) decreased from 1,74% to 1,68%, compared to 31 December 2006. The lower RoA is primarily related to the Bancassurance segment, reflecting flat earnings. This ratio remains ahead of the Group’s objective of maintaining an RoA of greater than 1,5%.

Absa’s asset base grew by 29,4% to R640,9 billion as at 31 December 2007. Interest-bearing assets increased by 27,9% and comprise 86,4% of total assets.

Absa Group Limited Financial results for the year ended 31 December 2007

Capital management strategy The capital management strategy is to continue to maximise shareholder value through optimising both the level and mix of capital resources. Decisions on the allocation of capital resources, conducted as part of the strategic planning review, are based on a number of factors including return on economic and regulatory capital.

Capital management objectives of the Group • Meet the individual capital ratios required by our regulators plus a prudent buffer set by the board; • Support endeavours of the Barclays Group to maintain a AA credit rating; and • Generate sufficient capital to support asset growth.

Importance of capital management The importance of capital planning is reflected by capital being managed as a board level priority in the Group. The board is responsible for assessing and approving a capital management policy, capital target levels, capital strategy and risk based capital allocation in the Group. The capital ratios, together with the short term and medium term capital plans, are disclosed as a minimum on a quarterly basis to the board of directors.

Capital adequacy During the period under review Absa Bank was the first bank to introduce a monthly preference share auction programme and successfully placed preference shares amounting to R1,7 billion at yields between 72,25% and 75,0% of prime.

Absa Bank also issued a tier II bond (AB 07). The principal amount of the bond was R1 725 billion with legal maturity of 7 March 2019 and an option to call it on 7 March 2014. The issue spread for the bond was 110 basis points above the R201 government bond.

The securitisation of Absa Bank’s home loans and vehicle finance receivables of R1,6 billion and R5,3 billion respectively assisted in the Group’s management of risk-weighted assets.

On the basis of the prescribed consolidated regulatory capital requirements, the Group’s capital stood at 13,1% of risk-weighted assets at 31 December 2007 (2006: 13,1%). The Group’s primary capital ratio was 10,1% (2006: 10,2%) and its secondary capital ratio was 3,0% as at 31 December 2007 (2006: 2,9%).

Absa Group Limited Financial results for the year ended 31 December 2007 Credit ratings Moody’s CA Ratings Fitch Ratings November December November 2007 2006 2007 Absa Bank Absa Group Absa Bank Absa Group National Short-term Prime-1.za za A1+ F1+ (zaf) F1+ (zaf) Long-term Aaa.za Za AAA AAA (zaf) AAA (zaf) Outlook Stable Stable Stable Stable

Local currency Short-term Prime-1——— Long-term Aa2 — A+ A+ Outlook Stable — Negative Negative

Foreign currency Short-term Prime-2 — F1 F1 Long-term Baa1 — A A Outlook Positive — Stable Stable

Bank Financial Strength C——— Outlook Stable——— Individual — — B/C B/C Support — — 1 1

Absa Group Limited Financial results for the year ended 31 December 2007 Basel II update

The Group successfully implemented the Basel II Accord (Basel II) on 1 January 2008. The preparation for this event required considerable time and effort from management and the board as well as a substantial investment of just over R300 million.

Approval has been received from the South African Reserve Bank to implement the advanced internal rating- based approach for retail credit whilst the foundation internal rating-based approach will be implemented for wholesale and corporate credit. The advanced measurement approach will be implemented for operational risk. The standardised approach for credit risk will be implemented for all African entities.

Absa Group has participated in the Quantitative Impact Studies and the parallel run processes initiated by the South African Reserve Bank to determine the impact of Basel II on the capital position. Management has refined the assumptions of the risk models and obtained guidance on the interpretation of the new Bank Regulations. The Group is in a position to comply with the requirements with effect from 1 January 2008.

The capital requirements of Absa Bank are expected to reduce while the net qualifying capital will also decrease as a result of:

• the deduction of the excess of expected loss (Basel II) above accounting impairments (IFRS) from qualifying capital; and

• portfolio impairments and general credit risk reserve no longer qualify as regulatory capital.

The impact of the capital adequacy ratio of Absa Bank is expected to be marginally positive.

The impact on the capital adequacy ratio of Absa Group will be more profound due to the fact that the excess capital of insurance entities that is held above the minimum regulatory requirement is excluded from the capital base of Absa Group, resulting in a reduction in the capital adequacy ratio of the Group.

Absa Group Limited Financial results for the year ended 31 December 2007 28

Absa Group Limited Financial results for the year ended 31 December 2007 CONTENTS Primary statements Group balance sheet 29 Group income statement 31 Group income statement – banking and insurance activities 32 Group statement of changes in equity 33 Group cash flow statement 35

Notes to the financial statements 36 • Loans and advances to customers 36 • Investments in associated undertakings and joint ventures 37 • Deposits due to customers 38 • Debt securities in issue 39 • Borrowed funds 39 • Impairment losses on loans and advances 40 • Non-interest income 43 Fee and commission income 43 Fee and commission expense 44 Net insurance premium income 44 Net insurance claims and benefits paid 44 Gains and losses from banking and trading activities 45 Gains and losses from investment activities 45 Other operating income 46 • Operating expenditure 46 Operating expenses 46 Non-credit related impairments 46 • Determination of headline earnings 47 • Diluted earnings per share 48 • Share trusts 49 Capital adequacy 53 Definitions 55

Absa Group Limited Financial results for the year ended 31 December 2007 Group balance sheet As at 31 December

2007 2006 (Audited) (Audited) Change Notes Rm Rm % Assets Cash, cash balances and balances with central banks 20 629 16 461 25,3 Statutory liquid asset portfolio 22 957 20 829 10,2 Loans and advances to banks 54 025 21 800 >100,0 Trading assets 25 824 18 014 43,4 Hedging assets 725 645 12,4 Other assets 24 303 12 175 99,6 Current tax assets 185 24 >100,0 Loans and advances to customers 1 455 958 373 825 22,0 Reinsurance assets 485 390 24,4 Deferred tax assets 111 129 (14,0) Investments 29 327 26 147 12,2 Investments in associated undertakings and joint ventures 2 1 469 693 >100,0 Intangible assets 301 230 30,9 Property and equipment 4 610 3 750 22,9 Total assets 640 909 495 112 29,4 Liabilities Deposits from banks 58 033 24 817 >100,0 Trading liabilities 34 919 24 125 44,7 Hedging liabilities 2 226 1 261 76,5 Other liabilities and sundry provisions 12 301 10 220 20,4 Current tax liabilities 183 1 181 (84,5) Deposits due to customers 3 310 512 279 848 11,0 Debt securities in issue 4 156 424 98 940 58,1 Deferred tax liabilities 2 576 2 537 1,5 Liabilities under investment contracts 7 908 5 655 39,8 Policyholder liabilities under insurance contracts 3 318 3 187 4,1 Borrowed funds 5 9 949 8 420 18,2 Total liabilities 598 349 460 191 30,0

Equity Capital and reserves Attributable to ordinary equity holders of the Group: Share capital 1 350 1 338 0,9 Share premium 2 292 2 067 10,9 Other reserves 406 412 (1,5) Retained earnings 33 527 27 876 20,3 37 575 31 693 18,6 Minority interest – ordinary shares 341 236 44,5 Minority interest – preference shares 4 644 2 992 55,2 Total equity 42 560 34 921 21,9

Total equity and liabilities 640 909 495 112 29,4

Contingent liabilities – banking related 53 197 49 036 8,5

Absa Group Limited Financial results for the year ended 31 December 2007 IAS 39: Balance sheet classification As at 31 December

2007 2006 Assets Liabilities Assets Liabilities Rm Rm Rm Rm Fair value 104 182 89 118 81 460 42 885 Held for trading 25 824 34 919 18 014 24 125 sTrading assets designated as trading 25 824 — 18 014 — sTrading liabilities designated as trading — 34 919 — 24 125 Designated as fair value 53 983 54 199 45 647 18 760 sMoney market assets 3 644 — 2 377 — sStatutory liquid asset portfolio 2 683 — 3 744 — sLoans and advances to banks 257 — —— sHedging assets 725 — 645 — sLoans and advances to customers 21 244 — 13 084 — sReinsurance assets 485 — 390 — sInvestments 24 945 — 25 407 — sDeposits from banks — 1 602 —— sHedging liabilities — 2 226 — 1 261 sOther liabilities and sundry provisions — 234 —— sDeposits due to customers — 38 466 — 265 sDebt securities in issue — 3 763 — 11 579 sLiabilities under investment contracts — 7 908 — 5 655 Available-for-sale 24 375 — 17 799 — sMoney market assets 737 — 463 — sStatutory liquid asset portfolio 9 933 — 7 663 — sStatutory liquid asset portfolio – hedging relationship 10 341 — 9 422 — sInvestments 3 364 — 251 —

Amortised cost 529 649 501 500 408 518 409 197 Loans and receivables 528 370 — 407 396 — Held to maturity 1 279 — 1 122 — Amortised cost liabilities — 501 500 — 409 197 Non-financial assets and liabilities 7 078 7 731 5 134 8 109 Total equity — 42 560 — 34 921 640 909 640 909 495 112 495 112

Absa Group Limited Financial results for the year ended 31 December 2007 Group income statement Year ended 31 December

2007 2006 (Audited) (Audited) Change Notes Rm Rm %

Net interest income 18 890 14 887 26,9

Interest and similar income 55 123 37 569 46,7 Interest expense and similar charges (36 233) (22 682) (59,7)

Impairment losses on loans and advances 6 (2 433) (1 573) (54,7) Net interest income after impairment losses on loans and advances 16 457 13 314 23,6 Net fee and commission income 11 600 10 153 14,3

Fee and commission income 7.1 12 873 11 247 14,5 Fee and commission expense 7.2 (1 273) (1 094) (16,4)

Net insurance premium income 7.3 3 192 2 994 6,6 Net insurance claims and benefits paid 7.4 (1 603) (1 319) (21,5) Changes in insurance and investment liabilities (489) (748) 34,6 Gains and losses from banking and trading activities 7.5 1 622 1 376 17,9 Gains and losses from investment activities 7.6 1 561 1 891 (17,5) Other operating income 7.7 845 672 25,7

Operating income before operating expenses 33 185 28 333 17,1 Operating expenditure (19 209) (17 029) (12,8)

Operating expenses 8.1 (18 442) (16 089) (14,6) Non-credit related impairments 8.2 (58) (75) 22,7 Indirect taxation (709) (865) 18,0

Share of retained earnings from associated undertakings and joint ventures 91 113 (19,5)

Operating profit before income tax 14 067 11 417 23,2 Taxation expense (4 042) (3 151) (28,3)

Profit for the year 10 025 8 266 21,3

Attributable to: Ordinary equity holders of the Group 9 595 8 105 18,4 Minority interest – ordinary shares 117 88 (33,0) Minority interest – preference shares 313 73 >(100,0)

10 025 8 266 21,3

• basic earnings per share (cents per share) 10 1 428,9 1 216,8 17,4 • diluted earnings per share (cents per share) 10 1 341,4 1 154,4 16,2 Headline earnings 9 9 413 7 872 19,6

• headline earnings per share (cents per share) 1 401,9 1 181,8 18,6 • diluted headline earnings per share (cents per share) 1 316,1 1 121,3 17,4

Absa Group Limited Financial results for the year ended 31 December 2007 Group income statement – banking and insurance activities Year ended 31 December

2007 2006 Change Rm Rm % Income from banking and other activities 32 416 26 742 21,2 Net interest income 18 889 14 887 26,9 Interest and similar income 55 123 37 569 46,7 Interest expense and similar charges (36 233) (22 682) (59,7) Non-interest income 13 525 11 855 14,1 Net fee and commission income 10 910 9 604 13,6 Gains and losses from banking and trading activities 1 622 1 376 17,9 Other income 993 875 13,5

Income from bancassurance activities 5 275 5 178 1,9 Net insurance premium income 3 192 2 994 6,6 Net investment gains 1 393 1 635 (14,8) Net fee and commission income 690 549 25,7

Total operating income 37 690 31 920 18,1 Impairment losses on loans and advances (2 433) (1 573) (54,7) Benefits due to policyholders (2 073) (2 014) (2,9) Net insurance claims and benefits paid (1 603) (1 319) (21,5) Changes in investment liabilities (534) (508) (5,1) Changes in insurance liabilities 45 (240) >100,0 Other income 19 53 (64,2)

Income after impairment losses and policyholders’ benefits 33 185 28 333 17,1 Operating expenditure in banking activities (18 012) (15 975) (12,8) Operating expenses (17 292) (15 093) (14,6) Non-credit related impairments (58) (75) 22,7 Indirect taxation (662) (807) 18,0 Operating expenditure in bancassurance activities (1 197) (1 054) (13,6) Operating expenses (1 150) (996) (15,5) Indirect taxation (47) (58) 19,0 Share of retained earnings of associated undertakings and joint ventures 91 113 (19,5) Operating profit before income tax 14 067 11 417 23,2 Taxation expense (4 042) (3 151) (28,3) Profit for the year 10 025 8 266 21,3 Attributable to: Ordinary equity holders of the Group 9 595 8 105 18,4 Minority interest – ordinary shares 117 88 (33,0) Minority interest – preference shares 313 73 >(100,0) 10 025 8 266 21,3

Headline earnings 9 413 7 872 19,6

Absa Group Limited Financial results for the year ended 31 December 2007 Group statement of changes in equity As at 31 December

2007 2006 (Audited) (Audited) Change Rm Rm %

Share capital 1 350 1 338 0,9

Opening balance 1 338 1 327 0,8 Shares issued 13 10 30,0 Transfer from share-based payment reserve 0 0— Share buy-back in respect of Absa Group Limited Share Incentive Trust (0) (0) — Elimination of treasury shares held by Absa Group Limited Share Incentive Trust (0) 1 >(100,0) Elimination of treasury shares held by Absa Life Limited and Absa Fund Managers Limited (1) 0 >(100,0) Elimination of treasury shares held by Absa Group Limited Employee Share Ownership Administration (ESOP) Trust (0) — (100,0)

Share premium 2 292 2 067 10,9

Opening balance 2 067 1 875 10,2 Shares issued 345 170 >100,0 Transfer from share-based payment reserve 93 23 >100,0 Share buy-back in respect of Absa Group Limited Share Incentive Trust (130) (17) >(100,0) Elimination of treasury shares held by Absa Group Limited Share Incentive Trust (5) 4 >(100,0) Elimination of treasury shares held by Absa Life Limited and Absa Fund Managers Limited (73) 12 >(100,0) Elimination of treasury shares held by Absa Group Limited Employee Share Ownership Administration (ESOP) Trust (5) — (100,0)

Other reserves 406 412 (1,5)

Opening balance 412 622 (33,8) Movement in foreign currency translation reserve (59) 332 >(100,0) Movement in regulatory general credit risk reserve 435 46 >100,0 Movement in available-for-sale reserve 60 58 3,4 Movement in cash flow hedges reserve (540) (485) (11,3) Movement in insurance contingency reserve 20 38 (47,4) Movement in associated undertakings and joint ventures’ retained earnings reserve 91 113 (19,5) Disposal of associated undertakings and joint ventures – release of reserves — (374) 100,0 Share-based payments for the year 81 85 (4,7) Transfer from share-based payment reserve (94) (23) >(100,0)

Absa Group Limited Financial results for the year ended 31 December 2007 2007 2006 (Audited) (Audited) Change Rm Rm %

Retained earnings 33 527 27 876 20,3 Opening balance 27 876 21 931 27,1 Subsidiary step-up acquisitions 2 (43) >100,0 Transfer to regulatory general credit risk reserve (435) (46) >(100,0) Transfer to insurance contingency reserve (20) (38) 47,4 Transfer to associated undertakings and joint ventures’ retained earnings reserve (91) (113) 19,5 Disposal of associated undertakings and joint ventures – release of reserves — 374 (100,0) Transfer from share-based payment reserve 1 — 100,0 Profit attributable to ordinary equity holders 9 595 8 105 18,4 Dividends paid during the year (3 401) (2 294) (48,3)

37 575 31 693 18,6 Minority interest – ordinary shares 341 236 44,5 Opening balance 236 246 (4,1) Disposals — (40) 100,0 Other reserve movements (12) (58) 79,3 Minority share of profit 117 88 33,0 Minority interest – preference shares 4 644 2 992 55,2 Opening balance 2 992 — 100,0 Shares issued 1 658 3 000 (44,7) Costs incurred (6) (8) 25,0 Profit attributable to preference equity holders 313 73 >100,0 Preference dividends paid during the year (313) (73) >(100,0)

Total equity 42 560 34 921 21,9

Absa Group Limited Financial results for the year ended 31 December 2007 Group cash flow statement Year ended 31 December

2007 2006 (Audited) (Audited) Change Notes Rm Rm % Net cash generated/(utilised) from operating activities 7 016 (4 016) >100,0 Net cash utilised from investing activities (4 996) (2 342) >(100,0) Net cash (utilised)/generated from financing activities (214) 2 799 >(100,0) Net increase/(decrease) in cash and cash equivalents 1 806 (3 559) >100,0 Cash and cash equivalents at the beginning of the year 1 4 787 8 343 (42,6) Effect of exchange rate movements on cash and cash equivalents 3 3 — Cash and cash equivalents at the end of the year 2 6 596 4 787 37,8

Notes to the cash flow statement 1. Cash and cash equivalents at the beginning of the year Cash, cash balances and balances with central banks 3 936 3 431 14,7 Loans and advances to banks 851 4 912 (82,7) 4 787 8 343 (42,6) 2. Cash and cash equivalents at the end of the year Cash, cash balances and balances with central banks 5 091 3 936 29,3 Loans and advances to banks 1 505 851 76,9 6 596 4 787 37,8

Absa Group Limited Financial results for the year ended 31 December 2007 Notes to the financial statements As at 31 December

2007 2006 Change Rm Rm % 1. Loans and advances to customers Total Retail advances Cheque accounts 6 278 5 024 25,0 Credit card accounts 13 827 11 245 23,0 Instalment finance 63 867 56 920 12,2 Loans to associated undertakings and joint ventures 6 467 6 226 3,9 Mortgages (including commercial property finance) 228 339 187 327 21,9 Personal loans 9 782 9 279 5,4 Microloans 2 645 1 444 83,2 UniFer book 189 464 (59,3) New business 2 456 980 >100,0 Other 1 186 810 46,4 Gross advances 332 391 278 275 19,4 Impairment losses on loans and advances (3 788) (3 085) (22,8) Net advances 328 603 275 190 19,4

Total Absa Corporate and Business Bank (ACBB) advances Cheque accounts 12 873 10 356 24,3 Foreign currency loans 1 025 1 423 (28,0) Loans to associated undertakings and joint ventures 1 028 967 6,3 Mortgages (including commercial property finance) 36 257 27 486 31,9 Overnight finance 4 568 3 109 46,9 Preference shares 1 135 — 100,0 Specialised finance and corporate overdrafts 5 662 4 565 24,0 Term loans 7 079 7 130 (0,7) Other 2 278 2 478 (8,1) Gross advances 71 905 57 514 25,0 Impairment losses on loans and advances (1 535) (1 374) (11,7) Net advances 70 370 56 140 25,3

Total Absa Capital advances Foreign currency loans 9 828 3 045 >100,0 Loans granted under resale agreements (Carries) and reverse repurchase agreements 8 233 8 561 (3,8) Loans to associated undertakings and joint ventures 1 782 453 >100,0 Overnight finance 8 068 4 261 89,3 Preference shares 8 579 9 097 (5,7) Wholesale overdrafts 13 901 11 873 17,1 Other 2 814 1 703 65,2 Gross advances 53 205 38 993 36,4 Impairment losses on loans and advances (194) (193) (0,5) Net advances 53 011 38 800 36,6

Absa Group Limited Financial results for the year ended 31 December 2007 2007 2006 Change Rm Rm % 1. Loans and advances to customers (continued) Total Africa advances Cheque accounts 1 222 820 49,0 Credit card accounts 14 11 27,3 Foreign currency loans 903 617 46,4 Personal and term loans 1 312 928 41,4 Other — 2 (100,0)

Gross advances 3 451 2 378 45,1 Impairment losses on loans and advances (111) (87) (27,6)

Net advances 3 340 2 291 45,8

Total Other advances Foreign currency loans 82 108 (24,1) Mortgages (including commercial property finance) 83 760 (89,1) Preference shares 163 204 (20,1) Other 344 332 3,6

Gross advances 672 1 404 (52,1) Impairment losses on loans and advances (38) — (100,0)

Net advances 634 1 404 (54,8)

Total gross advances 461 624 378 564 21,9 Impairment losses on loans and advances (5 666) (4 739) (19,6)

Total net advances 455 958 373 825 22,0

2. Investments in associated undertakings and joint ventures FFS Finance South Africa (Proprietary) Limited 261 211 23,7 MAN Financial Services (S.A.) (Proprietary) Limited 46 35 31,4 Commercial property finance related investments (ACBB) 1 059 343 >100,0 Other 103 104 (1,0)

1 469 693 >100,0

Absa Group Limited Financial results for the year ended 31 December 2007 2007 2006 Change Rm Rm % 3. Deposits due to customers Total Retail deposits Call 2 669 3 096 (13,8) Cheque accounts 25 238 23 144 9,0 Credit card 2 173 2 291 (5,2) Fixed 24 947 20 191 23,6 Investment products 6 300 — 100,0 Notice 6 420 6 392 0,4 Savings and transmission 28 631 25 017 14,4 Other 574 724 (20,7)

Total deposits 96 952 80 855 19,9

Total Absa Corporate and Business Bank (ACBB) deposits Call 9 705 9 034 7,4 Cheque account 38 341 31 850 20,4 Fixed 24 518 22 462 9,2 Foreign currency 1 844 3 290 (44,0) Other 1 893 1 055 79,4

Total deposits 76 301 67 691 12,7

Total Absa Capital deposits Call 33 352 30 050 11,0 Cheque account 31 197 33 779 (7,6) Fixed 52 461 48 347 8,5 Foreign currency 6 049 8 173 (26,0) Repurchase agreements 1 115 — 100,0 Other 6 489 5 848 11,0

Total deposits 130 663 126 197 3,5

Total Africa deposits Call 28 414 (93,2) Cheque account 2 185 1 313 66,4 Fixed 481 340 41,5 Foreign currency 1 784 1 678 6,3 Savings and transmission 1 593 1 188 34,1 Other 48 41 17,1

Total deposits 6 119 4 974 23,0

Total Other deposits Fixed — 1 (100,0) Foreign currency 8 45 (82,2) Other 469 85 >100,0 Total deposits 477 131 >100,0

Total deposits 310 512 279 848 11,0

Absa Group Limited Financial results for the year ended 31 December 2007 2007 2006 Change Rm Rm % 4. Debt securities in issue Customers 139 335 88 601 57,3

Abacas – Commercial paper issued 12 416 11 523 7,7 Floating rate notes 33 185 13 962 >100,0 Liabilities arising from securitised Special Purpose Entities (SPE) 9 985 3 494 >100,0 Negotiable certificates of deposit 62 509 43 554 43,5 Promissory notes 6 301 16 068 (60,8) Other debt securities in issue 14 939 — >100,0

Banks 17 089 10 339 65,3

Floating rate notes 2 764 — >100,0 Negotiable certificates of deposit 13 416 5 828 >100,0 Promissory notes 909 4 511 (79,8)

156 424 98 940 58,1

5. Borrowed funds Subordinated callable notes 14,25% (AB02) 3 100 3 100 — 10,75% (AB03) 1 100 1 100 — 3-month JIBAR + 0,75% (AB04) 400 400 — 8,75% (AB05) 1 500 1 500 — 8,10% (AB06) 2 000 2 000 — 8,80% (AB07) 1 725 — 100,0 Accrued interest 297 253 17,4 Fair value adjustment* (326) (85) >(100,0) Redeemable cumulative option-holding preference shares 153 152 0,7

Shares issued 158 158 — Elimination of Absa Group Limited Employee Share Ownership Administration (ESOP) Trust (5) (12) 58,3 Redemption of preference shares by Absa Group Limited Employee Share Ownership Administration (ESOP) Trust (7) — (100,0) Accrued dividend 7 6 16,7

9 949 8 420 18,2

*The fair value adjustment relates to subordinated callable notes designated as hedge items in a hedge relationship.

Absa Group Limited Financial results for the year ended 31 December 2007 Notes to the financial statements Year ended 31 December

2007 2006 Change Rm Rm % 6. Impairment losses on loans and advances Loans and advances to customers 2 851 1 952 (46,1) Less: recoveries of impairment of advances (418) (379) 10,3

2 433 1 573 (54,7)

Credit impairments per segment Retail banking Absa Private Bank 69 61 (13,1) Personal Bank 627 314 >(100,0) Absa Home Loans and Repossessed Properties 485 194 >(100,0) Absa Card 382 173 >(100,0) Absa Vehicle and Asset Finance 672 453 (48,3)

Total charge 2 235 1 195 (87,0)

Impairment loss ratio 0,74 0,49

Absa Corporate and Business Bank (ACBB)

Total charge 148 331 55,3

Impairment loss ratio 0,23 0,67

Absa Group Limited Financial results for the year ended 31 December 2007 2007 2006 Change Rm Rm % 6. Impairment losses on loans and advances (continued)

Absa Capital

Total charge 1 (2) >(100,0)

Impairment loss ratio 0,00 0,00

African operations

Total charge 41 52 21,2

Impairment loss ratio 1,47 2,56

Bancassurance and other

Total charge 8 (3) >(100,0)

Impairment loss ratio n/a n/a

Total charge to the income statement 2 433 1 573 (54,7)

Accumulated impairments Identified impairments 3 656 3 035 (20,5)

Identified 3 320 2 690 (23,4) Net present value adjustment 336 345 2,6

Unidentified impairments 2 010 1 704 (18,0)

5 666 4 739 (19,6)

Absa Group Limited Financial results for the year ended 31 December 2007 Outstanding Fair value Net Specific Expected balance of collateral exposure impairment recoveries Rm Rm Rm Rm Rm 6. Impairment losses on loans and advances (continued) Non-performing advances at 31 December 2007 Absa Home Loans 4 090 3 576 514 514 — Absa Vehicle and Asset Finance 979 403 576 576 — Absa Card 1 054 — 1 054 698 356 Other 639 386 253 253 —

Retail banking 6 762 4 365 2 397 2 041 356

Absa Corporate and Business Bank 408 260 148 148 —

Absa Capital 24 — 24 16 8

African operations and other 117 40 77 77 —

7 311 4 665 2 646 2 282 364

Non-performing advances as % of loans and advances to customers 1,6

Non-performing advances at 31 December 2006 4 987 2 700 2 287 1 996 291

Non-performing advances as % of loans and advances to customers 1,3

Absa Group Limited Financial results for the year ended 31 December 2007 2007 2006 Change Rm Rm % 7. Non-interest income 7.1 Fee and commission income Credit-related fees and commissions 10 208 9 054 12,7

Cheque accounts 2 575 2 405 7,1 Credit cards 1 551 1 390 11,6 Early redemption penalty income 196 256 (23,4) Electronic banking 2 657 2 248 18,2 Foreign exchange fees and commissions 285 229 24,5 Savings accounts 1 801 1 512 19,1 Other 1 143 1 014 12,7

Corporate finance fees 289 136 >100,0 External administration fees 217 157 38,2 Insurance commission received 877 771 13,7 Pension fund payment services 489 452 8,2 Portfolio and other management fees 255 209 22,0 Trust and estate income 228 201 13,4 Unit/property trust income 310 267 16,1

12 873 11 247 14,5

Absa Group Limited Financial results for the year ended 31 December 2007 2007 2006 Change Rm Rm % 7. Non-interest income (continued) 7.2 Fee and commission expense Cheque processing fees (147) (136) (8,1) Debt collecting fees (121) (144) 16,0 Commission paid (671) (543) (23,6) Transaction based legal fees (101) (78) (29,5) Valuation fees (130) (91) (42,9) Other fee and commission expenses (103) (102) (1,0)

(1 273) (1 094) (16,4)

7.3 Net insurance premium income Insurance premium revenue 3 531 3 269 8,0 Premiums ceded to reinsurers (339) (275) (23,3)

3 192 2 994 6,6

7.4 Net insurance claims and benefits paid Gross claims and benefits paid on insurance contracts (1 847) (1 376) (34,2) Reinsurance recoveries 244 57 >100,0

(1 603) (1 319) (21,5)

Changes in insurance and investment liabilities (489) (748) 34,6

Absa Group Limited Financial results for the year ended 31 December 2007 2007 2006 Change Rm Rm %

7.5 Gains and losses from banking and trading activities

Designated fair value 878 (147) >100,0

Debt securities in issue (112) — (100,0) Loans and advances and deposits 261 (381) >100,0 Investments 783 389 >100,0

Debt instruments (71) (50) (42,0) Equity instruments 854 439 94,5

Statutory liquid assets portfolio (54) (155) 65,2

Associated undertakings and joint ventures 2 167 (98,8)

Dividends from associated banking entities 8 — 100,0 (Loss)/profit realised on disposal of associated undertakings and joint ventures (6) 167 >(100,0)

Held for trading 663 1 357 (51,1)

Ineffective hedges 79 (1) >100,0

Cash flow hedges (60) (5) >(100,0) Fair value hedges 139 4 >100,0

1 622 1 376 17,9

7.6 Gains and losses from investment activities Fair value through profit and loss 1 418 1 715 (17,3)

Net investment gains from bancassurance activities 1 393 1 635 (14,8)

Policyholder – investment contracts 579 520 11,3 Policyholder – insurance contracts 243 378 (35,7) Shareholder funds 571 737 (22,5)

Other investment gains 25 80 (68,8) Dividend income 61 72 (15,3) Profit realised on available-for-sale instruments 9 — 100,0 Profit realised on disposal of associated undertakings and joint ventures 37 54 (31,5) Profit realised on disposal of subsidiary 36 50 (28,0)

1 561 1 891 (17,5)

Absa Group Limited Financial results for the year ended 31 December 2007 2007 2006 Change Rm Rm %

7. Non-interest income (continued) 7.7 Other operating income Exchange differences on operational activities 95 81 17,3 Profit on sale of property and equipment* 80 11 >100,0 Profit on sale of internally generated intangible assets 68 — 100,0 Property development profit 191 148 29,1 Property rentals 94 92 2,2 Sundry income 317 340 (6,8)

845 672 25,7

Total non-interest income 16 728 15 019 11,4

*Includes R60 million profit on sale of property (commercial property finance related).

8. Operating expenditure 8.1 Operating expenses Property and equipment-related Accommodation costs 399 357 (11,8) Amortisation 85 37 >(100,0) Depreciation 780 739 (5,5) Equipment rentals and maintenance 221 174 (27,0) Insurance premiums 239 178 (34,3) Operating lease rentals 1 017 953 (6,7) Professional fees Auditors’ remuneration 77 67 (14,9) Other professional fees 850 880 3,4 Staff-related Staff costs 8 362 7 041 (18,8) Incentive schemes 1 422 1 176 (20,9) Other staff-related costs 333 262 (27,1) Other Cash transportation costs 347 298 (16,4) Clearing and bank charges 152 115 (32,2) Frauds and losses 224 213 (5,2) Information technology costs 1 140 1 154 1,2 Marketing and advertising costs 898 728 (23,4) Printing, stationery, postage and telephone costs 965 835 (15,6) Other operating costs 256 242 (5,8) Barclays synergy costs 675 640 (5,5)

18 442 16 089 (14,6) 8.2 Non-credit related impairments Associated undertakings and joint ventures — 10 100,0 Available-for-sale assets — (5) (100,0) Computer software development costs 21 66 68,2 Property and equipment — 4 100,0 Repossessed Properties 37 — (100,0) 58 75 22,7

Absa Group Limited Financial results for the year ended 31 December 2007 2007 2006 Change Rm Rm %

9. Determination of headline earnings* Headline earnings is determined as follows: Profit attributable to ordinary equity holders of the Group 9 595 8 105 18,4 Adjustments for: IAS 16 net profit on disposal of property and equipment (57) (8) >(100,0) IAS 21 recycle foreign currency translation reserve, disposal of investment in foreign operations (29) — (100,0) IAS 27 net profit on disposal of subsidiaries (26) (36) 27,8 IAS 28 and 31 net profit on disposal of associated undertakings and joint ventures (31) (167) 81,4 IAS 28 impairment of associated undertakings and joint ventures — 7 (100,0) IAS 28 underlying associated undertakings and joint ventures’ earnings (45) (54) 16,7 IAS 36 impairment of assets — 3 (100,0) IAS 38 net profit on disposal and impairment of intangible assets (43) 47 >(100,0) IAS 39 release of available-for-sale reserves 49 (21) >100,0 IAS 39 impairment of available-for-sale assets and strategic investments — (4) 100,0

Headline earnings 9 413 7 872 19,6

*After tax and minorities.

Absa Group Limited Financial results for the year ended 31 December 2007 2007 2006 Change Rm Rm %

10. Diluted earnings per share Profit attributable to ordinary equity holders of the Group 9 595 8 105 18,4 Interest expense on convertible debt (net of tax) 15 13 15,4

Diluted earnings 9 610 8 118 18,4

Issued shares at the beginning of the year 672,0 666,9 0,8 Effect of shares issued during the year 2,8 2,1 33,3 Less: treasury shares held by the Absa Group Limited Share Incentive Trust (2,5) (2,7) 7,4 Less: treasury shares held by Absa Life Limited and Absa Fund Managers Limited (0,7) (0,2) >(100,0) Less: treasury shares held by the Absa Group Limited Employee Share Ownership Administration (ESOP) Trust (0,1) — (100,0) Weighted average number of ordinary shares in issue (millions) 671,5 666,1 0,8

Basic earnings per share (cents) 1 428,9 1 216,8 17,4

Weighted average number of ordinary shares in issue (millions) 671,5 666,1 0,8 Adjustments for shares at no value: options linked to redeemable preference shares (millions) 36,8 28,6 28,7 share options (millions) 8,1 8,5 (4,7) Diluted weighted average number of ordinary shares in issue (millions) 716,4 703,2 1,9

Diluted earnings per share (cents) 1 341,4 1 154,4 16,2

Absa Group Limited Financial results for the year ended 31 December 2007 Notes to the financial statements As at 31 December

11. Share trusts Absa Group Limited Share Incentive Trust In terms of the rules of the Absa Group Limited Share Incentive Trust, the maximum number of shares of the Group that may be issued or transferred and/or in respect of which options may be granted to the participants, shall be limited to shares representing 10% of the total number of issued shares. Options are allocated to Group employees according to the normal human resources talent management processes. The options issued up to August 2005 (issue 192) had no performance criteria linked to them and vested in equal tranches after three, four and five years respectively. No dividends accrue to the optionholder over the period. The options expire after a period of 10 years from the issuing date. Options issued since August 2005 (issue 193) have vesting performance criteria associated with them, which require headline earnings per share to exceed an agreed benchmark over a three-year period from July 2005 for the options to vest. As required by IFRS, the trust has been consolidated into the Group’s financial statements. Number of shares

2007 2006 (Audited) (Audited)

Shares and options subject to the trust at the beginning of the year 18 778 473 25 125 744 Shares issued and options granted during the year 260 000 586 000

19 038 473 25 711 744 Options exercised and implemented, options forfeited or cancelled and shares released or repurchased by the trustees in terms of the rules of the trust (5 420 159) (6 933 271)

Shares and options subject to the trust at the end of the year 13 618 314 18 778 473

Of which are exercisable 5 602 545 5 304 576

2007 2006 % (Audited) % (Audited) of total of total issued Number issued Number shares of shares shares of shares Maximum shares and options available 10,0 67 857 307 10,0 67 195 507 Shares and options subject to the trust (2,0) (13 618 314) (2,8) (18 778 473) Balance of shares and options available 8,0 54 238 993 7,2 48 417 034

Details regarding the options granted and still outstanding at 31 December 2007 are as follows: Number of options Average option price Expiry date* R

Year to 31 March 2009 106 746 17,85 Year to 31 March 2010 255 314 27,68 Year to 31 March 2011 284 999 29,96 Year to 31 March 2012 829 131 36,60 Year to 31 March 2013 1 465 277 33,60 Year to 31 March 2014 1 925 474 35,35 Year to 31 March 2015 4 405 122 50,26 Year to 31 December 2015 3 572 751 91,44 Year to 31 December 2016 773 500 107,31

13 618 314 58,41

*Options are implementable at least five years before expiry date.

Absa Group Limited Financial results for the year ended 31 December 2007 11. Share trusts (continued) Batho Bonke Capital (Proprietary) Limited The Group entered into a black economic empowerment (BEE) transaction with Batho Bonke Capital (Proprietary) Limited in July 2004. As the shares issued in terms of the transaction vested immediately and the issue was before 1 January 2005, the provisions of IFRS 2 were not applicable. No costs will be recognised in the income statement of the Group. On 1 July 2004, 73 152 300 preference shares were issued. The preference shares receive a dividend calculated on par value of the preference shares at a rate of 72% of the prime overdraft rate. These dividends are compounded and paid semi-annually in arrear on 30 September and 31 March of each year. Absa Group will redeem the preference shares on exercise of the options by the participant or after five years from the date of issue. Options can be exercised from 1 July 2007, on 1 March, 1 June, 1 September or 1 December each year commencing from 1 July 2007. Exercise may occur in lots of 100 only and on payment of the option strike price, which will vary between R48,00 and R69,00 dependent on the 30-day volume weighted trading price on the JSE Limited. Number of shares 2007 2006 (Audited) (Audited) Outstanding at the end of the year 73 152 300 73 152 300 There were 73 152 300 options exercisable as at balance sheet date (31 December 2006: nil). The options outstanding have an exercise price range of R48,00 to R69,00 and weighted average contractual life of 1,5 years (31 December 2006: 2,5 years).

Absa Group Limited Employee Share Ownership Administration (ESOP) Trust All employees (as of the implementation date – 1 July 2004) of South African wholly owned subsidaries, including South African employees on secondment elsewhere in the Group (excluding executive directors of Absa Group and Absa Bank), were eligible to participate in this one-off-offer. Each employee who elected to participate was issued and allocated 200 redeemable cumulative option-holding preference shares against a receipt of the R400 subscription price. On 1 July 2004, 6 085 200 preference shares were issued. The preference shares receive a dividend calculated on par value of the preference shares at a rate of 72% of the prime overdraft rate. These dividends are compounded and paid semi-annually in arrear on 30 September and 31 March of each year. Absa Group will redeem the preference shares on exercise of the options by the participant or after five years from the date of issue. Options can be exercised on 1 March, 1 June, 1 September or 1 December each year commencing from 1 July 2007. Exercise may occur in lots of 100 only and on payment of the option strike price, which will vary between R48,00 and R69,00 dependent on the 30-day volume weighted trading price on the JSE Limited. A maximum of 7 315 200 preference shares are available for allocation to the trust. The trust has also been consolidated into the Group’s financial statements. The trust held 2 467 200 redeemable cumulative option- holding preference shares at the end of the year of which 1 521 100 have been forfeited to date (31 December 2006: 1 237 800). Number of shares 2007 2006 (Audited) (Audited) Outstanding at the beginning of the year 4 847 400 5 359 400 Less: forfeited during the year (308 500) (512 000) Less: exercised during the year (3 592 800) — Outstanding at the end of the year 946 100 4 847 400 There were 946 100 options exercisable as at balance sheet date (31 December 2006: nil). The options outstanding have an exercise price range of R48,00 to R69,00 and weighted average contractual life of 1,5 years (31 December 2006: 2,5 years).

Absa Group Limited Financial results for the year ended 31 December 2007 11. Share trusts (continued) Absa Group Phantom Performance Share Plan (Phantom PSP) The Phantom PSP was implemented as an alternative to the Absa Group Limited Share Incentive Trust. The Phantom PSP is a cash-settled plan and payments made to participants in respect of their awards are in the form of cash. The Phantom PSP shares (and any associated notional dividend shares) are awarded at no cost to the participants. The amount that is ultimately paid out to the participants is equal to the market value of a number of ordinary shares equal to the number of Phantom shares awarded to that participant, as determined after a three-year vesting period. The vesting of the Phantom PSP awards will be subject to two non-market performance conditions which will be measured over a three-year period. The first performance condition is subject to a profit after tax hurdle, while the second condition is subject to an earnings per share target. The awards would be released to employees according to a sliding scale from 40% to 300% of the award, dependent upon the scale of achievement against the earnings per share benchmark and provided that the profit before tax threshold has been passed. If the threshold is not passed the award will not vest. The awards will vest after three years to the extent that the performance conditions are satisfied. These awards are forfeited in total if the Group performance fails to meet the minimum performance criteria. Number of shares

2007 2006 (Audited) (Audited)

Outstanding at the beginning of the year 1 118 350 — Granted during the year 1 382 085 1 118 350 Less: forfeited during the year (177 552) —

Outstanding at the end of the year 2 322 883 1 118 350

The options outstanding have no exercise price and a weighted average contractual life of 1,9 years (31 December 2006: 2,4 years). As the terms and conditions of this share scheme dictate that options be exercised immediately on vesting, it means that at any given time there are no options which have vested but have not been exercised.

The Absa Group Executive Share Award Scheme (ESAS) – Voluntary (Restricted) Method Certain qualifying participants with “banked bonuses” under any of the Group’s existing employee incentive schemes were allowed a one-off opportunity during the 2006 financial year to utilise banked bonuses to purchase nil-cost options in the ESAS. The ESAS is an equity-settled share-based payment arrangement, where the participant’s notional bonus comprises a number of restricted nil-cost options, based on the allocation price of ordinary shares. If the participant is in the employ of the Group after the three-year vesting period, the participant will receive 20% matched shares. If the bonus award remains in the ESAS trust for another two years, the participant receives another 10% matched shares. Dividend shares are paid to participants on the ordinary shares as if the shares were held from inception. The number of dividend shares awarded is calculated on the initial allocation and on the 20% and 10% match, over the five-year period. Number of shares

2007 2006 (Audited) (Audited)

Outstanding at the beginning of the year 37 059 — Granted during the year — 37 059

Outstanding at the end of the year 37 059 37 059

The options outstanding have no exercise price and a weighted average contractual life of 2,7 years (31 December 2006: 3,7 years). None of these options were exercisable at the balance sheet date.

Absa Group Limited Financial results for the year ended 31 December 2007 11. Share trusts (continued) Absa Group Phantom Joiners Share Award Plan (JSAP) The JSAP is a cash-settled share-based payment arrangement that enables the Group to attract and motivate new employees by buying out the “in the money” portion of a participant’s shares or options under their previous employer’s share scheme by offering the employees Absa Group Phantom shares. There is no consideration payable for the grant of the award and the vesting of the awards is not subject to performance conditions. Dividends accrue to the participant over the vesting period which can be over two, three, five or six years.

Number of shares

2007 2006 (Audited) (Audited)

Outstanding at the beginning of the year 90 067 — Granted during the year 284 133 90 067 Less: exercised during the year (44 951) — Less: forfeited during the year (16 874) —

Outstanding at the end of the year 312 375 90 067

The options outstanding have no exercise price and a weighted average contractual life of 1,9 years (31 December 2006: 3,0 years). As the terms and conditions of this share scheme dictate that options be exercised immediately on vesting, it means that at any given time there are no options which have vested but have not been exercised.

The Absa Group Phantom Executive Share Award Scheme (Phantom ESAS) The Phantom ESAS is a cash-settled share-based payment arrangement, where the participant’s notional bonus comprises a number of restricted nil-cost options, based on the allocation price of ordinary shares. If the participant is in the employ of the Group after the three-year vesting period, the participant will receive 20% bonus Phantom shares. If the bonus award remains in the ESAS scheme for another two years, the participant receives another 10% bonus Phantom shares. Dividend Phantom shares are paid to participants on the ordinary Phantom shares as if the shares were held from inception. The number of dividend shares awarded is calculated on the initial allocation and on the 20% and 10% bonus Phantom shares, over the five-year period.

Number of shares

2007 2006 (Audited) (Audited)

Outstanding at the beginning of the year — — Granted during the year 486 722 — Less: forfeited during the year (30 656) —

Outstanding at the end of the year 456 066 —

The options outstanding have no exercise price and a weighted average contractual life of 3,5 years. As the terms and conditions of this share scheme dictate that options be exercised immediately on vesting, it means that at any given time there are no options which have vested but have not been exercised.

Absa Group Limited Financial results for the year ended 31 December 2007 Capital adequacy As at 31 December

2007 2006 Unweighted Risk-weighted Risk-weighted assets assets assets Rm Rm Rm ABSA BANK LIMITED Risk-weighted assets Assets – banking activities On-balance sheet 521 137 338 385 278 231 Off-balance sheet 868 709 9 719 8 498 1 389 846 348 104 286 729 Notional assets – trading activities — 11 557 10 439 1 389 846* 359 661 297 168

Qualifying capital Rm %** %** Primary capital Ordinary share capital 303 0,1 0,1 Ordinary share premium 5 415 1,5 1,8 Preference shares 4 644 1,3 1,0 Reserves 22 755 6,3 6,2 33 117 9,2 9,1 Secondary capital Subordinated redeemable debt 10 325 2,9 2,9 Regulatory credit provision/reserve*** 1 638 0,4 0,3 Impairments (10) (0,0) — 11 953 3,3 3,2

45 070 12,5 12,3

*Includes Central Securities Depository Participation (CSDP) of R810 807 million risk-weighted at 0%. **Percentage of capital to risk-weighted assets. ***Includes unidentified impairment provisions.

Absa Group Limited Financial results for the year ended 31 December 2007

2007 2006 Risk- Capital Capital weighted adequacy adequacy assets ratio ratio Rm % % ABSA GROUP LIMITED AND ITS BANKING SUBSIDIARIES South African operations Absa Bank 359 661 12,5 12,3 Non-South African operations Absa Bank London (a branch of Absa Bank) 2 760 40,5 44,9 Barclays Bank Mozambique 816 16,5 26,2 National Bank of Commerce (Tanzania) 3 535 13,2 12,8

Total banking operations 366 772 12,8 12,5

Risk-weighted assets (Rm) 366 772 302 458 Tier I capital (Rm) 34 657 28 316 Tier I ratio (%) 9,5 9,4

Absa Group Limited 13,1 13,1

Risk-weighted assets (Rm) 390 695 314 479 Tier I capital (Rm) 39 602 32 161 Tier I ratio (%) 10,1 10,2

Risk-weighted assets/total assets (%) 61,0 63,5

Absa Group Limited Financial results for the year ended 31 December 2007 Definitions

Capital adequacy ratio The capital adequacy of South African banks is measured in terms of the South African Banks Act requirements. The ratio is calculated by dividing the primary (Tier I), secondary (Tier II) and tertiary (Tier III) capital by the risk- weighted assets. The minimum South African total capital adequacy ratio for banks is now 10% of risk-weighted assets. Non-South African banks within the Group have similar requirements.

Primary (Tier I) capital Primary capital consists of issued ordinary share capital and non-cumulative perpetual preference share capital, retained earnings and the reserves. This amount is then reduced by the portion of capital that is allocated to trading activities.

Secondary (Tier II) capital Secondary capital is made up of compulsory convertible loans, the general impairment provision/reserve and 50% of any revaluation reserves.

Tertiary (Tier III) capital Tertiary capital is made up of unappropriated profits in the trading book.

Impairment losses on loans and advances as percentage of average loans and advances to customers Advances impairments are made where there is objective evidence that the Group will not be able to collect all amounts due. The impairment is the difference between the carrying and recoverable amount. The estimated recoverable amount is the present value of expected future cash flows which may result from restructuring, liquidation or collateral held.

Cost-to-income ratio Operating expenses as a percentage of income from operations. Income consists of net interest income and non-interest income.

Cost-to-asset ratio Operating expenses for the year/period (annualised) divided by average assets (calculated on a daily average basis), expressed as a percentage of average assets.

Dividend cover Headline earnings per share divided by dividends per share.

Dividends per ordinary share relating to income for the year/period Dividends per ordinary share for the year is the actual interim dividends paid and the final dividends declared for the year under consideration, expressed as cents per share. Dividends per share for the interim period is the interim dividends declared for the period.

Earnings per share

Profit attributable to ordinary equity holders Net profit for the year divided by the weighted average number of ordinary shares in issue during the year.

Headline earnings basis Headline earnings for the year divided by the weighted average number of shares in issue during the year.

Absa Group Limited Financial results for the year ended 31 December 2007 Fully diluted basis The amount of profit for the year that is attributable to ordinary equity holders divided by the weighted average number of ordinary shares outstanding during the year, both adjusted for the effects of all dilutive potential ordinary shares, assuming they had been in issue for the year.

Headline earnings Headline earnings is not a measure of sustainable earnings. Headline earnings reflect the operating performance of the Group separated from re-measurements (an amount recognised in the income statement relating to any change (realised or unrealised) in the carrying amount of an asset/liability that arose after the initial recognition of such asset or liability) as well as minority interest – preference shares.

Market capitalisation The Group’s closing share price times the number of shares in issue.

Net asset value per share Total equity attributable to ordinary equity holders divided by the number of shares in issue. The net asset value per share figure excludes the non-cumulative, non-redeemable preference shares issued.

Net interest margin on average assets Net interest income for the year divided by average assets (calculated on a daily average basis), expressed as a percentage of average assets.

Net interest margin on average interest-bearing assets Net interest income for the year divided by average interest-bearing assets (calculated on a daily average basis), expressed as a percentage of average interest-bearing assets. Average interest-bearing assets consist of cash, cash balances and balances with central banks, statutory liquid asset portfolio, loans and advances to banks as well as loans and advances to customers. (It includes cash and short-term assets, money market assets and capital market assets.)

Non-interest income as percentage of operating income Non-interest income as a percentage of income from operations. Income consists of net interest income and non-interest income.

Non-interest income Non-interest income consists of the following income statement line items: net fee and commission income, net insurance premium income, net claims and benefits paid, changes in insurance and investment liabilities, gains and losses from banking and trading activities, gains and losses from investment activities as well as other operating income.

Price (closing) earnings ratio The closing price of ordinary shares divided by headline earnings per share for the year/period (annualised).

Price-to-book The closing share price relative to the net asset value.

Absa Group Limited Financial results for the year ended 31 December 2007 Risk-weighted assets Risk-weighted assets are determined by applying risk weights to balance sheet assets and off-balance sheet financial instruments according to the relative credit risk of the counterparty. The risk weighting for each balance sheet asset and off-balance sheet financial instrument is regulated by the South African Banks Act or by regulations in the respective countries of the other banking licences.

Weighted average number of shares The number of shares in issue at the beginning of the year increased by shares issued during the year, weighted on a time basis for the period during which they participated in the income of the Group, less treasury shares held by entities in the Group, weighted on a time basis for the period during which the entities held these shares.

Gains and losses from banking and trading activities Comprises banking and trading portfolios and includes: s realised gains on financial instruments held at amortised cost, held to maturity or available-for-sale; s realised gains on the disposal of associated undertakings, joint ventures and subsidiaries, within the banking portfolios; and s interest, dividends and fair value movements on certain financial instruments held for trading or at fair value through profit and loss.

Gains and losses from investment activities Comprises insurance and strategic investment portfolios and includes: s realised gains on financial instruments held at amortised cost, held to maturity or available-for-sale; s realised gains on the disposal of associated undertakings, joint ventures and subsidiaries; and s interest, dividends and fair value movements on certain financial instruments held for trading or at fair value through profit and loss.

IFRS 2 costs In a share-based payment transaction an entity receives goods or services and pays for those goods or services either in shares or in other equity instruments. A transaction also is considered to be a share-based payment if the entity incurs a liability whose amount is based on the price or value of an entity’s share or other entity instrument of the entity.

Borrowed funds Borrowed funds represents subordinated callable bonds qualifying as long-term tier II capital issued by Absa Bank in terms of Section 1 of the Banks Act, 1990. The subordinated callable bonds are listed on the Bond Exchange of South Africa. It also includes preference shares classified as debt in terms of IAS 32 and 39.

Debt securities in issue Comprised primarily of short-to-medium-term instruments issued by the Group and includes promissory notes, bonds, negotiable certificates of deposits and commercial paper. These instruments were previously reported under “Deposits due to customers” and “Deposits from banks”.

These definitions should be read in conjunction with the Group’s accounting policies, which also clarify certain terms used.

Absa Group Limited Financial results for the year ended 31 December 2007 BUSINESS UNIT PERFORMANCE BUSINESS UNIT PERFORMANCE

CONTENTS

Proﬁt contribution by business area 58 Segmental reporting per market segment 59 Retail banking 63

Bancassurance operations 64 g Balance sheet 64 g Income statement 65 g Other information 67

Commentary 68 Profit contribution by business area Year ended 31 December

2007* 2006*

14,5% 18,1% 1,0% 0,9%

16,8% 49,1% 13,4% 50,9%

18,6% 16,7%

Retail banking Absa Corporate and Business Bank Absa Capital African operations Bancassurance

*Calculated after the allocation of capital, funding and corporate centre.

2007 2006* (Audited) (Audited) Change Notes Rm Rm % Banking operations Retail banking 5 071 4 22220,1 Absa Private Bank 237 178 33,1 Personal Bank 1 2 070 1 479 40,0 Absa Home Loans and Repossessed Properties 1 288 1 086 18,6 Absa Card 706 700 0,9 Absa Vehicle and Asset Finance 770 779 (1,2) Absa Corporate and Business Bank 1 922 1 384 38,9 Absa Capital 1 733 1 115 55,4 African operations 2 103 77 33,8 Corporate centre 3 (3) 203 >(100,0) Capital and funding centre 59 131 (55,0) Total banking 8 885 7 132 24,6 Bancassurance 1 502 1 500 0,1 Total earnings from business areas 10 387 8 632 20,3 Synergy costs (after tax) 4 (479) (454) (5,5) Minority interest – preference shares (313) (73) >(100,0) Profit attributable to ordinary equity holders 9 595 8 105 18,4 Headline earnings adjustments (182) (233) 21,9

Total headline earnings 9 413 7 872 19,6

Notes 1. Personal Bank includes the results of Digital Banking, Micro Lending, Personal Bank Ventures and Alliances, Small Business, Telephone Banking and Entry Level Banking. 2. To provide comparability, the equity accounted earnings of Capricorn Investment Holdings, which was sold in 2006, has been moved to Corporate centre. 3. In the prior year Corporate centre included the profit on disposal of Bankhaus Wölbern, Capricorn, AST and JSE shares. 4. Synergies relate to the integration of Absa and Barclays following the acquisition by Barclays of a majority share in Absa. Synergy costs are one-off costs incurred in achieving synergy benefits. *The comparative period has been restated for: s Migration of clients from Private Bank to Personal Bank in the current year. s AllPay Consolidated Investment Holdings (Proprietary) Limited was moved from Corporate centre to Retail banking during the year under review. s Absa Development Company Holdings (Proprietary) Limited was moved from Corporate centre to Absa Corporate and Business Bank during the year under review.

Absa Group Limited Financial results for the year ended 31 December 2007 Segmental reporting per market segment

Absa Corporate and Retail banking Business Bank Absa Capital

Dec Dec Change Dec Dec Change Dec Dec Change 2007 2006 % 2007 2006 % 2007 2006 %

Income statement (Rm) Net interest income 12 816 10 006 28,1 3 897 3 092 26,0 1 655 1 092 51,6 Impairment losses on loans and advances (2 235) (1 195) (87,0) (148) (331) 55,3 (1) 2 >(100,0) Non-interest income 9 083 8 267 9,9 2 255 2 076 8,6 2 155 1 427 51,0 Operating expenses (11 957) (10 566) (13,2) (3 241) (2 841) (14,1) (1 320) (945) (39,7) Other (270) (278) 2,9 13 (14) >100,0 (77) (108) 28,7

Operating profit before income tax 7 437 6 234 19,3 2 776 1 982 40,1 2 412 1 468 64,3 Taxation expense (2 341) (1 989) (17,7) (851) (598) (42,3) (679) (353) (92,4)

Profit for the year 5 096 4 245 20,0 1 925 1 384 39,1 1 733 1 115 55,4

Attributable to: Ordinary equity holders of the Group 5 071 4 222 20,1 1 922 1 384 38,9 1 733 1 115 55,4 Minority interest – ordinary shares 25 23 (8,7) 3 — (100,0) — — — Minority interest – preference shares — —— — —— — ——

5 096 4 245 20,0 1 925 1 384 39,1 1 733 1 115 55,4

Balance sheet (Rm) Total advances 328 603 275 190 19,4 70 370 56 140 25,3 53 011 38 800 36,6 Investments in associated undertakings and joint ventures 341 283 20,5 1 059 344 >100,0 — —— Other assets 104 839 75 403 39,0 19 456 24 934 (22,0) 371 432 243 110 52,8

Other assets – external 35 166 24 799 41,8 8 024 6 447 24,5 97 872 56 462 73,3 Other assets – internal* 69 673 50 604 37,7 11 432 18 487 (38,2) 273 560 186 648 46,6

Total assets 433 783 350 876 23,6 90 885 81 418 11,6 424 443 281 910 50,6

Total deposits 96 952 80 855 19,9 76 301 67 691 12,7 130 663 126 197 3,5 Other liabilities 315 469 255 330 23,6 7 614 8 470 (10,1) 288 071 151 416 90,3

Other liabilities – external 24 333 9 211 >100,0 6 528 7 354 (11,2) 232 967 141 452 64,7 Other liabilities – internal* 291 136 246 119 18,3 1 086 1 116 (2,7) 55 104 9 964 >100,0

Total liabilities 412 421 336 185 22,7 83 915 76 161 10,2 418 734 277 613 50,8

* Internal assets and liabilities for the Group are eliminated in “Other”.

Absa Group Limited Financial results for the year ended 31 December 2007 African operations Bancassurance Other Absa Group

Dec Dec Change Dec Dec Change Dec Dec Change Dec Dec Change 2007 2006 % 2007 2006 % 2007 2006 % 2007 2006 %

533 376 41,8 (49) 37 >(100,0) 38 284 (86,6) 18 890 14 887 26,9

(41) (52) 21,2 1 (2) >100,0 (9) 5 >(100,0) (2 433) (1 573) (54,7) 256 216 18,5 3 251 3 076 5,7 (272) (43) >(100,0) 16 728 15 019 11,4 (479) (383) (25,1) (1 150) (996) (15,5) (295) (358) 17,6 (18 442) (16 089) (14,6) (9) (1) >(100,0) (47) (58) 19,0 (286) (368) 22,3 (676) (827) 18,3

260 156 66,7 2 006 2 057 (2,5) (824) (480) (71,7) 14 067 11 417 23,2 (68) (19) >(100,0) (504) (553) 8,9 401 361 11,1 (4 042) (3 151) (28,3)

192 137 40,1 1 502 1 504 (0,1) (423) (119) >(100,0) 10 025 8 266 21,3

103 77 33,8 1 502 1 500 0,1 (736) (193) >(100,0) 9 595 8 105 18,4 89 60 (48,3) — 4 100,0 — 1 100,0 117 88 (33,0) — —— — — — 313 73 >(100,0) 313 73 >(100,0)

192 137 40,1 1 502 1 504 (0,1) (423) (119) >(100,0) 10 025 8 266 21,3

3 340 2 291 45,8 — 120 (100,0) 634 1 284 (50,6) 455 958 373 825 22,0

49 46 6,5 — — — 20 20 — 1 469 693 >100,0 4 820 4 283 12,5 37 526 23 829 57,5 (354 591) (250 965) (41,3) 183 482 120 594 52,1

4 781 4 158 15,0 37 386 23 711 57,7 253 5 017 (95,0) 183 482 120 594 52,1 39 125 (68,8) 140 118 18,6 (354 844) (255 982) (38,6) — ——

8 209 6 620 24,0 37 526 23 949 56,7 (353 937) (249 661) (41,8) 640 909 495 112 29,4

6 119 4 974 23,0 — —— 477 131 >100,0 310 512 279 848 11,0 1 099 718 53,1 33 618 19 911 68,8 (358 034) (255 502) (40,1) 287 837 180 343 59,6

1 046 663 57,8 25 368 18 939 33,9 (2 405) 2 724 >(100,0) 287 837 180 343 59,6 53 55 (3,6) 8 250 972 >100,0 (355 629) (258 226) (37,7) — ——

7 218 5 692 26,8 33 618 19 911 68,8 (357 557) (255 371) (40,0) 598 349 460 191 30,0

Absa Group Limited Financial results for the year ended 31 December 2007 Absa Corporate and Retail banking Business Bank Absa Capital

Dec Dec Change Dec Dec Change Dec Dec Change 2007 2006 % 2007 2006 % 2007 2006 %

Financial performance (%) Return on average equity 26,8 29,1 30,0 27,4 34,6 27,1 Return on average assets 1,28 1,35 2,13 1,70 0,49 0,44

Operating performance (%) Net interest margin on average assets 3,25 3,21 4,38 4,09 n/a n/a Advances margin 2,80 2,90 3,21 3,44 n/a n/a Deposit margin 3,85 3,67 1,94 1,82 n/a n/a Impairment losses on loans and advances as % of average loans and advances to customers 0,74 0,49 0,23 0,67 0,00 0,00 Non-interest income as % of operating income 41,4 45,2 36,6 40,2 56,6 56,6 Top-line growth 19,8 24,9 19,0 17,8 51,2 29,8 Cost growth 13,2 16,1 14,1 15,1 39,6 6,1 Cost-to-income ratio 54,5 57,8 52,7 55,0 34,6 37,5 Cost-to-assets ratio 3,1 3,4 3,8 3,8 0,4 0,4

Other Customer base per segment (South Africa) 8 905 491 8 303 873 7,2 87 708 81 661 7,4 2 503 2 415 3,6

Restatement of prior year figures Abacas Reclassified from loans and advances to customers to investments (11 228) Reclassified from interest to gains and losses from banking and trading activities (44) Reclassified from gains and losses from investment activities to gains and losses from banking and trading activities (25) Investments Reclassified from loans and advances to customers (303) (818) Debt securities in issue Reclassified from deposits due to customers (3 494) (1 458) (83 447) Net interest income Reclassified from operating expenses (4) Reclassified from indirect taxation (6) Fee and commission income Reclassified from other operating income (15) (0) Fee and commission expense Reclassified from operating expenses (237) (9) (1) Reclassified from fee income Gains and losses from banking and trading activities Reclassified from operating expenses (72) (40)

Absa Group Limited Financial results for the year ended 31 December 2007 African operations Bancassurance Other Absa Group

Dec Dec Change Dec Dec Change Dec Dec Change Dec Dec Change 2007 2006 % 2007 2006 % 2007 2006 % 2007 2006 %

20,1 17,1 37,8 38,9 n/a n/a 27,2 27,4 1,39 1,28 4,88 7,75 n/a n/a 1,68 1,74

7,49 6,26 n/a n/a n/a n/a 3,37 3,28 4,86 5,71 n/a n/a n/a n/a 2,39 2,73 5,06 3,86 n/a n/a n/a n/a 1,33 0,72

1,47 2,56 n/a n/a n/a n/a 0,58 0,45

32,4 36,5 101,5 98,8 n/a n/a 47,0 50,2 33,3 (7,1) 2,9 6,7 n/a n/a 19,1 18,0 25,3 (12,6) 15,5 8,9 n/a n/a 14,6 12,1 60,7 64,7 35,9 32,0 n/a n/a 51,8 53,8 6,5 6,4 3,7 5,2 n/a n/a 3,2 3,6

8 995 702 8 387 949 7,2

(11 228)

(44)

(25)

(1 121)

(202) (88 601)

(4) (6)

(250) (1) (266)

(3) (5) (233) 488 (29) (29)

(40)

Absa Group Limited Financial results for the year ended 31 December 2007 Retail banking

Absa Private Bank Personal Bank* Absa Home Loans**

Dec Dec Dec Dec Dec Dec 2007 2006 2007 2006 2007 2006

Attributable earnings (Rm) 237 178 2 070 1 479 1 288 1 086 Return on average equity (%) 15,4 13,3 102,7 114,3 15,1 16,5 Cost-to-income ratio (%) 69,2 71,5 65,7 70,2 34,6 39,6 Impairment losses on loans and advances as % of average loans and advances to customers 0,26 0,27 4,35 2,78 0,26 0,13 Total assets (Rm) 31 030 26 520 90 359 65 626 219 947 177 762 Total loans and advances (Rm) 28 709 24 548 15 749 13 082 202 497 165 218 Total deposits (Rm) 18 879 14 409 75 977 64 159 — — Total liabilities (Rm) 29 314 25 151 87 864 65 486 210 124 170 489

Absa Vehicle and Absa Card Asset Finance Total

Dec Dec Dec Dec Dec Dec 2007 2006 2007 2006 2007 2006

Attributable earnings (Rm) 706 700 770 779 5 071 4 222 Return on average equity (%) 70,7 104,4 13,7 16,8 26,8 29,1 Cost-to-income ratio (%) 40,8 42,1 43,9 44,9 54,5 57,8 Impairment losses on loans and advances as % of average loans and advances to customers 3,50 2,08 1,02 0,80 0,74 0,49 Total assets (Rm) 13 995 11 189 78 452 69 779 433 783 350 876 Total loans and advances (Rm) 11 817 9 998 69 831 62 344 328 603 275 190 Total deposits (Rm) 2 065 2 247 31 40 96 952 80 855 Total liabilities (Rm) 12 807 10 380 72 312 64 679 412 421 336 185

ATTRIBUTABLE EARNINGS %

Retail banking 31 December 2007 Bancassurance 31 December 2007 4,7% 15,2% 7,7% 6,5%

34,9% 13,9% 15,1% 40,8%

35,8% 25,4%

Absa Private Bank Life Personal Bank Short-term Absa Home Loans Investment Absa Card Fiduciary Absa Vehicle and Asset Finance Other

*Includes the results of Digital Banking, Micro Lending, Personal Bank Ventures and Alliances, Small Business, Telephone Banking and Entry Level Banking. **Includes the results of Repossessed Properties. Note: These results are after the allocation of head office and support charges.

Absa Group Limited Financial results for the year ended 31 December 2007 Bancassurance operations As at 31 December

Note 2007 2006 Change % Balance sheet (Rm) Assets Cash balances and money market assets 3 644 2 403 51,6

Insurance operations 1 3 200 2 025 58,0 Other 444 378 17,5

Other assets* 22 483 10 890 >100,0 Investments 11 362 10 626 6,9

Insurance operations 1 10 058 9 382 7,2 Other 1 304 1 244 4,8

Property and equipment 37 30 23,3

Total assets 37 526 23 949 56,7

Liabilities Current tax liabilities 129 223 (42,2) Liabilities under investment contracts 7 908 5 655 39,8 Policyholder liabilities under insurance contracts 3 250 3 111 4,5 Other liabilities and sundry provisions* 22 089 10 574 >100,0 Deferred tax liabilities 242 348 (30,5)

Total liabilities 33 618 19 911 68,8 Total equity 3 908 4 038 (3,2)

Total equity and liabilities 37 526 23 949 56,7

1. Cash balances, money market assets and investments (insurance operations)

2007 Cash and Listed Unlisted fixed interest Total

Shareholder investments 2 561 181 1 199 3 941

Life 784 113 89 986 Non-Life 1 777 68 1 110 2 955 Policyholder investment 381 4 771 4 165 9 317

Insurance contracts — 817 1 656 2 473 Investment contracts 381 3 954 2 509 6 844

2006** Cash and Listed Unlisted fixed interest Total

Shareholder investments 2 417 199 1 050 3 666

Life 686 150 231 1 067 Non-Life 1 731 49 819 2 599

Policyholder investment 825 4 140 2 776 7 741

Insurance contracts 555 679 1 197 2 431 Investment contracts 270 3 461 1 579 5 310

* Other assets and liabilities include settlement account balances in Stockbrokers. ** Restated for structural change. “Insurance operations” only include Absa Life Limited and Absa Insurance Company Limited (Short-term). In managing the liabilities toward policyholders, certain assets have been allocated specifically for the purposes of backing the policyholder liability, although no such split legally exists. The above disclosures reflect management of the policyholders. 64

Absa Group Limited Financial results for the year ended 31 December 2007 Bancassurance operations Year ended 31 December

Life insurance Change Note 2007 2006* %

Income statement (Rm) Net earned premium 1 142 1 265 (9,7) Net insurance claims (401) (303) (32,3) Investment income 1 • policyholder investment contracts 495 520 (4,8) • policyholder insurance contracts 170 317 (46,4) Changes in investment and insurance contracts • Investment contracts (482) (508) 5,1 • Insurance contracts 45 (240) >100,0 Other income 24 16 50,0

Gross operating income 993 1 067 (6,9) Commission** (196) (344) 43,0 Operating expenditure (187) (129) (45,0)

Net operating income 610 594 2,7 Investment income on shareholder funds 1 167 216 (22,7) Taxation (253) (219) (15,5)

Profit attributable to ordinary equity holders of the Group 524 591 (11,3)

1. Investment income Policyholder – investment contracts 495 520 (4,8)

Net interest income 44 75 (41,3) Dividend income 13 10 30,0 Fair value gains 438 435 0,7

Policyholder – insurance contracts 170 317 (46,4)

Net interest income 93 78 19,2 Dividend income 23 19 21,1 Fair value gains 54 220 (75,5)

Shareholder funds 167 216 (22,7)

Net interest income 9 15 (40,0) Dividend income 15 12 25,0 Fair value gains 143 189 (24,3)

Total 832 1 053 (21,0)

Net interest income 146 168 (13,1) Dividend income 51 41 24,4 Fair value gains 635 844 (24,8)

*Restated for structural change. “Insurance operations” only include Absa Life Limited and Absa Insurance Company Limited (Short-term). **Commission includes internal commissions, eliminated on consolidation of Absa Group. In managing the liabilities toward policyholders, certain assets have been allocated specifically for the purposes of backing the policyholder liability, although no such split legally exists. The above disclosures reflect management of the policyholders.

Absa Group Limited Financial results for the year ended 31 December 2007 Short-term insurance Other Total bancassurance Change Change Change 2007 2006* % 2007 2006* % 2007 2006 %

2 012 1 660 21,2 38 69 (44,9) 3 192 2 994 6,6 (1 244) (1 006) (23,7) 42 (10) >100,0 (1 603) (1 319) (21,5)

— —— 84 — 100,0 579 520 11,3 73 61 19,7 — —— 243 378 (35,7)

— ——(52) — (100,0) (534) (508) (5,1) — —— — —— 45 (240) >100,0 12 3 >100,0 1 203 1 144 5,2 1 239 1 163 6,6

853 718 18,8 1 315 1 203 9,3 3 161 2 988 5,8 (333) (276) (20,7) — 2 (100,0) (529) (618) 14,4 (204) (148) (37,8) (806) (777) (3,7) (1 197) (1 054) (13,6)

316 294 7,5 509 428 18,9 1 435 1 316 9,0 292 363 (19,6) 112 158 (29,1) 571 737 (22,5) (71) (180) 60,6 (180) (154) (16,9) (504) (553) 8,9

537 477 12,6 441 432 2,1 1 502 1 500 0,1

— —— 84 — 100,0 579 520 11,3

— —— 4 — 100,0 48 75 (36,0) — —— 44 — 100,0 57 10 >100,0 — —— 36 — 100,0 474 435 9,0

73 61 19,7 — —— 243 378 (35,7)

73 61 19,7 — —— 166 139 19,4 — —— — —— 23 19 21,1 — —— — —— 54 220 (75,5)

292 363 (19,6) 112 158 (29,1) 571 737 (22,5)

13 40 (67,5) 51 75 (32,0) 73 130 (43,8) 69 53 30,2 17 30 (43,3) 101 95 6,3 210 270 (22,2) 44 53 (17,0) 397 512 (22,5)

365 424 (13,9) 196 158 24,1 1 393 1 635 (14,8)

86 101 (14,9) 55 75 (26,7) 287 344 (16,6) 69 53 30,2 61 30 >100,0 181 124 46,0 210 270 (22,2) 80 53 50,9 925 1 167 (20,7)

Absa Group Limited Financial results for the year ended 31 December 2007 Bancassurance operations As at 31 December

2007 2006 Change % Embedded value and value of new business of Absa Life Limited (Rm) Shareholders’ net assets 1 082 1 430 (24,3) Cost of solvency capital (20) (20) — Value of business in force 1 029 1 076 (4,4)

Total embedded value 2 091 2 486 (15,9)

Embedded value earnings (Rm) 543 762 (28,7)

Return on embedded value (%) 21,8 37,2

Embedded value of new business (Rm) 213 263 (19,0)

Value of new business as a % of the present value of future premiums 5,3 7,7

Net asset value of short-term insurance companies (Rm) 1,845 1 844 0,1

Managed funds (Rm) Estates 2 850 2 223 28,2 Portfolio management 9 269 8 293 11,8 Trusts 5 719 4 980 14,8 Participation bond schemes 1 675 1 582 5,9 Unit trusts 68 733 61 545 11,7 Linked investments 22 805 15 503 47,1 Other 12 690 8 790 44,4 123 741 102 916 20,2

Absa Group Limited Financial results for the year ended 31 December 2007 Commentary

Retail banking – attributable earnings up by 20,1% Attributable earnings of R5 071 million were achieved as a result of volume growth in advances, deposits and transactions, whereas impairments were contained to below the market average. Mortgage and credit card advances, in particular, increased by 21,9% and 23,0% respectively. Instalment finance advances grew by 12,2% over the year, despite the decline in the demand for new motor vehicles and the declining values of used motor vehicles. The overall composition of advances remained unchanged, with secured lending comprising 87,9% of the total advances book. Transaction volumes increased by 8,2% emanating from an increase in the customer base, improved product use and improved accessibility. The retail customer base increased by 7,2% to 8,9 million as at 31 December 2007, compared with 8,3 million as at 31 December 2006. There was good growth in internet (20,0%) and cell phone banking transactions (26,0%) and moderate growth in ATM transactions (8,2%). Net interest margins remained broadly in line with those in 2006. Margins on deposit products widened following the increase in interest rates and the composite asset margin was slightly better because the advances mix changed in favour of higher-yielding advances. These benefits were countered by increased competition and the larger proportion of wholesale funding used. The retail impairment ratio for 2007 was 0,74%, compared with 0,49% for 2006. Consumers are under pressure as a result of higher interest rates and increased indebtedness. Credit criteria were strengthened early in 2007 in anticipation of the tougher environment and this has led to a marginal reduction in market share in some retail products. In addition, the capacity and technology of the collections department have been upgraded to deal with the increased number of customers that require assistance to manage their debt. Operating expenses increased by 13,2%, mainly as a result of the continued expansion of the delivery footprint and higher business volumes. Initiatives were implemented to enhance efficiency, especially relating to process streamlining.

Absa Corporate and Business Bank (ACBB) – attributable earnings up by 38,9% ACBB increased its attributable earnings to R1 922 million from the R1 384 million achieved in 2006. This performance was driven by growth in advances, deposits and transaction volumes. The quality of the advances book is sound, as evidenced by an impairment loss ratio of 0,23% compared with 0,67% for 2006. Non-interest income increased by 8,6% over the past year. Electronic banking transaction volumes, which grew by 17,4%, underpinned the growth in non-interest income and the commercial property finance portfolio also performed well, contributing R318 million (14,1% of non-interest income) for the year. Cheque accounts and corporate overdraft fees, which constitute a third of non-interest income, grew moderately by 4,1% as customers migrated to more sophisticated electronic channels and products. Operating expenses grew by 14,1%, mainly owing to an increased employee complement and the investment in upgrading expertise and skills.

Absa Capital – attributable earnings up by 55,4% Absa Capital increased attributable earnings to R1 733 million from R1 115 million in 2006 due to a strong performance across all business units. A key driver of this growth has been the ability to leverage off the synergies between Barclays Capital and Absa Capital in terms of technology, operating models, products and distribution. The revenue of Secondary Markets grew by 95,6% in 2007, and now contributes 37,2% of Absa Capital’s revenue. Secondary Markets has become an area of strength for Absa Capital by providing a broader product offering and increasing the deal flow from new and existing clients.

Absa Group Limited Financial results for the year ended 31 December 2007 The revenue of Primary Markets grew by 29,1% in 2007 and contributed 45,8% of Absa Capital’s revenue for the year. Fee income, in particular, grew by 149,0% compared with 2006. Absa Capital has invested significantly in the Primary Markets business to enhance the team and transform the business approach according to a client centric model that offers comprehensive international and local solutions. This has resulted in increased client deal flow and strong performances in the securitisation, leveraged finance and global loans businesses. The business of Equity Investments and Investor Services grew by 45,0% in 2007 and contributed 17,0% of Absa Capital’s revenue for the year, with a significant proportion of earnings attributable to the realisation of investments. Active management of the investment portfolio has positioned Equity Investments favourably for future growth, whereas Investor Services continues to perform well by deepening relationships with key mandates.

Bancassurance – attributable earnings sustained at R1 502 million The Group’s bancassurance operations posted attributable earnings of R1 502 million for 2007 and achieved a return on equity of 37,8%. New business volume growth underpinned a strong operational performance. However, investment income for the benefit of shareholders, declined by 22,5% as a result of a less buoyant equity market in 2007 compared with 2006. The Group’s short-term insurance operations increased earnings by 12,6% and contributed 35,8% (2006: 31,8%) to the Group’s bancassurance earnings. Gross premium income increased by 20,5%, which was primarily driven by strong growth in personal, agricultural and commercial business. However, a high claims experience in the motor and personal lines business, and losses on crop insurance tempered growth. Absa Life contributed 34,9% (2006: 39,4%) to earnings but experienced an 11,3% decrease in earnings compared with 2006, primarily owing to the lower equity market performance. Embedded value earnings of R543 million for 2007 represented a return on embedded value of 21,8% (2006: 37,2%). The Investment Management business unit grew earnings by 13,5% to contribute 15,1% (2006: 13,5%) to the earnings of the bancassurance cluster. Assets under management and administration as at 31 December 2007 grew by R21,6 billion (22,4%) to R118,3 billion as a result of improved inflows from retail and institutional investors. Fiduciary Services increased its earnings by 27,5% from 2006 owing to increased business volumes in pension fund administration and growth in assets under administration.

African operations – attributable earnings up by 33,8% Total revenue for the Group’s African portfolio increased by 33,3% compared with 2006. This increase was driven by strong performances from the National Bank of Commerce (NBC) in Tanzania, and Barclays Bank Mozambique, previously known as Banco Austral, Sarl. Advances and deposits grew by 45,8% and 23,0% respectively. The Group’s African operations increased their presence in their respective markets by expanding their retail networks. Thirty branches were opened and 49 ATMs were installed during the year.

Absa Group Limited Financial results for the year ended 31 December 2007 RESTATEMENT OF PRIOR YEAR FIGURES

CONTENTS

Group balance sheet – 31 December 2006 70 Group income statement – year ended 31 December 2006 71 Commentary 72 RESTATEMENT OF PRIOR YEAR FIGURES Group balance sheet Reclassifications Reclassification of certain assets and liabilities.

31 December 31 December 2006 2006 (Audited) (Audited) (As previously Reclassi- Rm Commentary reported) fications (Restated) Assets Cash, cash balances and balances with central banks 16 461 — 16 461 Statutory liquid asset portfolio 20 829 — 20 829 Loans and advances to banks 21 800 — 21 800 Trading assets 1 17 983 31 18 014 Hedging assets 1 676 (31) 645 Other assets 12 175 — 12 175 Current tax assets 24 — 24 Loans and advances to customers 2 & 3 386 174 (12 349) 373 825 Reinsurance assets 390 — 390 Deferred tax assets 129 — 129 Investments 2 & 3 13 798 12 349 26 147 Investments in associated undertakings and joint ventures 693 — 693 Intangible assets 230 — 230 Property and equipment 3 750 — 3 750 Total assets 495 112 —- 495 112 Liabilities Deposits from banks 4 35 156 (10 339) 24 817 Trading liabilities 1 23 484 641 24 125 Hedging liabilities 1 1 902 (641) 1 261 Other liabilities and sundry provisions 5 10 746 (526) 10 220 Current tax liabilities 1 181 — 1 181 Deposits due to customers 4 368 449 (88 601) 279 848 Debt securities in issue 4 — 98 940 98 940 Deferred tax liabilities 2 537 — 2 537 Liabilities under investment contracts 5 5 129 526 5 655 Policyholder liabilities under insurance contracts 3 187 — 3 187 Borrowed funds 8 420 — 8 420

Total liabilities 460 191 — 460 191 Equity Capital and reserves Attributable to ordinary equity holders of the Group: Share capital 1 338 — 1 338 Share premium 2 067 — 2 067 Other reserves 412 — 412 Retained earnings 27 876 — 27 876 31 693 — 31 693 Minority interest – ordinary shares 236 — 236 Minority interest – preference shares 2 992 — 2 992 Total equity 34 921 — 34 921 Total equity and liabilities 495 112 — 495 112

Absa Group Limited Financial results for the year ended 31 December 2007 Group income statement Reclassifications Reclassification of interest and investment gains on fair value through profit and loss assets as well as IFRS 7 reclassifications.

Year ended Year ended 31 December 31 December 2006 2006 (Audited) (Audited) (As previously Reclassi- Rm Commentary reported) fications (Restated) Net interest income 2 & 6 14 941 (54) 14 887 Interest and similar income 38 368 (799) 37 569 Interest expense and similar charges (23 427) 745 (22 682) Impairment losses on loans and advances (1 573) — (1 573) Net interest income after impairment losses on loans and advances 13 368 (54) 13 314 Net fee and commission income 10 374 (221) 10 153 Fee and commission income 7 & 8 10 951 296 11 247 Fee and commission expense 8 (577) (517) (1 094) Net insurance premium income 2 994 — 2 994 Net insurance claims and benefits paid (1 319) — (1 319) Changes in insurance and investment liabilities (748) — (748) Gains and losses from banking and trading activities 2 & 8 1 347 29 1 376 Gains and losses from investment activities 2 1 916 (25) 1 891 Other operating income 7 938 (266) 672 Operating income before operating expenses 28 870 (537) 28 333 Operating expenditure (17 566) 537 (17 029) Operating expenses 8 (16 620) 531 (16 089) Non-credit related impairments (75) — (75) Indirect taxation (871) 6 (865) Share of retained earnings from associated undertakings and joint ventures 113 — 113 Operating profit before income tax 11 417 — 11 417 Taxation expense (3 151) — (3 151) Profit for the year 8 266 — 8 266 Attributable to: Ordinary equity holders of the Group 8 105 — 8 105 Minority interest – ordinary shares 88 — 88 Minority interest – preference shares 73 — 73 8 266 — 8 266

Headline earnings 7 872 — 7 872

Absa Group Limited Financial results for the year ended 31 December 2007 Commentary

1. Trading and hedging assets and liabilities Certain trading assets and liabilities previously aggregated with hedging assets and liabilities have been separated.

2. Abacas Abacas is a conduit vehicle within Absa Capital that buys longer-term rated bonds and issues short-term paper. This vehicle is consolidated by the Group and the assets were reflected under “Loans and advances to customers”. This is now classified as “Investments”.

3. Equity and shareholder loans Shareholder loans granted to Private Equity, Commercial Property Finance and Incubator Fund clients have been reclassified as part of the net investment in that entity. Previously these were shown as “Loans and advances to customers”.

4. Debt securities in issue Negotiable certificates of deposits and other funding paper issued were previously reported as a sub-category of “Deposits due to customers” and “Deposits from banks”. This is disclosed on a separate line on the face of the balance sheet, called “Debt securities in issue”.

5. Liabilities under investment contracts The “General Fund”, a fund which Absa Life is required to consolidate under IFRS, has been reclassified as an investment contract. The impact of this is the liabilities to policyholders have been moved from “Other liabilities and sundry provisions” to “Liabilities under investment contracts”.

6. Reclassiﬁcation of interest Hedging income and expenses have been reclassified to better eliminate mismatches.

7. Fees from trust and other ﬁduciary activities Unit/property trust income has been reclassified from “Other operating income” to “Fee and commission income”.

8. Fee expenses and similar

While implementing IFRS 7, the Group adopted a policy where all fees paid relating to either a financial instrument or fee income, should be classified as a fee expense. Similarly any fees related to trading should be moved to “Gains and losses from banking and trading activities”.

Absa Group Limited Financial results for the year ended 31 December 2007 PRESENTATION TO THE IAS PRESENTATION TO THE IAS ABSA GROUP LIMITED

Financial results for the year ended December 2007

CONTENTS

INTRODUCTION

• Steve Booysen

FINANCIAL REVIEW

• Jacques Schindehütte

ABSA CAPITAL

• John Vitalo

CORPORATE AND BUSINESS BANK

• Robert Emslie

FUTURE PERSPECTIVE

• Steve Booysen

1 INTRODUCTION

Steve Booysen

FINANCIAL HIGHLIGHTS

• Headline earnings of R9.4 billion (½ 19.6%)

• Headline earnings per share of 1 402 cents (½ 18.6%)

• Attributable earnings of R9.6 billion (½ 18.4%)

• Dividends per share of 560 cents (½ 18.4%)

• Return on average equity of 27.2%

• Cost-to-income ratio of 51.8%

2 STRATEGIC INITIATIVES DELIVERING RESULTS

• Grow the franchise

• Diversify the earnings base

• Enhance risk management and collections

• Improve efficiency

• Leverage the Barclays relationship

• Attract and retain the best people

BANKING BUSINESSES DRIVING GROWTH Year ended 31 December 2007

Earnings Earnings RoE growth % mix % %

• Retail banking ½ 20 49 27

• Corporate and Business Bank ½ 39 19 30

• Absa Capital ½ 55 17 35

• African operations ½ 34 1 20

• Bancassurance » 0 14 38

Absa Group ½ 18 100 27

3 COMPLIANCE TO REGULATORY REQUIREMENTS

• National Credit Act successfully implemented

• Basel II up and running

• Compliance to international regulatory requirements

• Alignment of the Financial Sector Charter to the Codes of Good Practice

FINANCIAL REVIEW

Jacques Schindehütte

4 GROUP INCOME STATEMENT Year ended 31 December

2007 2006 Change Rm Rm %

Net interest income 18 890 14 887 ½ 27

Impairment charge (2 433) (1 573) ½ 55

Non-interest income 16 728 15 019 ½ 11

Operating expenditure* (19 209) (17 029) ½ 13

Taxation (4 042) (3 151) ½ 28

Attributable earnings 9 595 8 105 ½ 18

Headline earnings 9 413 7 872 ½ 20

* Including indirect taxation and non-credit related impairments

GROWTH IN ADVANCES

Dec 2007 YoY Market Advances Rbn change % share % mix %

• Mortgages and CPF* 265 22.9 31.1 57

• Credit cards 14 23.0 25.1 3

• Instalment finance 64 12.2 23.1 14

• Overdrafts and other 119 25.5 20.1 26

Gross advances 462 21.9 25.9 100

* Commercial property finance

5 FUNDING OF BALANCE SHEET GROWTH Year ended 31 December

2007 2006 Change 2007 mix 2006 mix Rbn Rbn % % %

• Retail banking 97 81 ½ 20 15 16 - Low margin 35 22 ½ 59 5 4 - High margin 62 59 ½ 6 10 12 • Commercial 76 68 ½ 13 12 14 • Institutional 335 246 ½ 36 52 50 • Securitisation 10 4 ½ 186 2 1 • Capital 53 43 ½ 21 8 9 • ‘Working capital’ 70 53 ½ 32 11 11 Funds employed 641 495 ½ 29 100 100

NORMALISATION OF CREDIT IMPAIRMENTS Consumers under increased pressure Year ended 31 December 2007

2007 2006 *NPL **Charge *NPL **Charge • Retail banking 2.0 0.74 1.6 0.49

- Home loans 2.0 0.26 1.4 0.13

- Credit cards 8.4 3.50 5.0 2.08

- Asset finance 1.4 1.02 0.9 0.80

• Corporate and Business Bank 0.6 0.23 0.8 0.67

• Absa Capital 0.0 0.00 0.0 0.00

• African operations 3.4 1.47 5.6 2.56

Absa Group 1.6 0.58 1.3 0.45

* As a percentage of total advances ** As a percentage of average advances

6 NET FEE AND COMMISSION INCOME Comprising 69% of total non-interest income

2007 Change Mix Rm % %

• Cheque accounts 2 575 ½ 7 20 • Credit cards 1 551 ½ 12 12 • Electronic banking 2 657 ½ 18 21 • Savings accounts 1 801 ½ 19 14

• Forex and other credit related fees 1 624 ½ 8 12 • Insurance commission received 877 ½ 14 7

• Asset management and fiduciary 1 010 ½ 21 8 • Pension fund payments and other 778 ½ 32 6 Gross fee and commission income 12 873 ½ 15 100

EQUITY GAINS Year ended 31 December

2007 2006 Change Rm Rm %

• Bancassurance investment income 1 393 1 635 ¾ 15

Less: Attributable to policyholders (822) (898) ¾ 8

• Attributable to shareholders 571 737 ¾ 23

Less: Interest and dividends (174) (225) ¾ 23

• Investment gains on bancassurance 397 512 ¾ 22

• Commercial property 258 337 ¾ 23

• Equity investments 427 221 ½ 93

7 GROWING THE FRANCHISE

2007 %

Increase in costs 14.6 • Integration programme 0.2 • Operational costs - Compliance 1.0 - Cash transportation costs 0.3 - Insurance 0.4 - Maintenance and IT costs 0.2 • Investment in growth - Marketing 0.6 - Infrastructure 0.8 - Talent and training 1.8 - Frontline staff 0.4 - Incentives 0.9 ‘Core’ cost growth 8.0

CAPITAL MANAGEMENT

Absa Bank Absa Group Tier I Tier II Total Tier I Tier II Total Basel I (%) 9.21 3.32 12.53 10.14 2.95 13.09 Basel II (%) 10.10 2.91 13.01 10.37 2.30 12.67 Target (%) 8.75 3.25 12.00 8.75 3.25 12.00 Surplus capital (Rbn) 0.50 2.00

Risk-weighted assets Basel I Basel II Capital requirement Basel I Basel II (RWAs) % % (Rbn) Credit risk 99 87 Minimum requirement 39.0 34.4 • Retail mortgages 33 21 Buffer 8.8 7.9 • Credit cards 3 4 Total 47.8 42.3 Qualifying capital (Rbn) Tier I Tier II • Wholesale 32 33 Basel I 39.6 11.5 • Other credit risk 31 29 Insurance surplus capital (2.8) – Market risk 1 1 Excess of expected loss (1.5) (1.5) Operational risk – 12 Other 1.3 (1.9) Total RWAs 100 100 Basel II 36.6 8.1

8 ABSA CAPITAL

John Vitalo

THE RESULTS IN BRIEF

• Revenue of R3.8 billion Absa Capital’s revenue* (½ 51%) R million

Three-year compounded annual 3 809 • Attributable earnings of R1.7 billion growth rate (CAGR) of 39% (½ 55%)

• Contribution to Group earnings of 17% 2 521 (½ 25%) 1 967 • Return on average equity of 35% (½ 28%)

Dec 2005 Dec 2006 Dec 2007

* Net of impairments

9 BUSINESS UNIT REVENUE CONTRIBUTION

• Revenue mix continues to diversify in Absa Capital – business unit earnings mix line with strategic objectives (%)

• Change in mix driven by relatively

stronger growth in Secondary Markets 14.4 17.6 17.0

• Objective is for Secondary Markets to 28.8 contribute 50% of revenue 36.4 37.2

53.6 49.2 45.8

Dec 2005 Dec 2006 Dec 2007 Primary Markets (%) Secondary Markets (%) Equity Investments and Investor Services (%)

REVENUE GROWTH BY BUSINESS UNIT

Strong revenue growth across all business units:

• Secondary Markets (½ 96%) • Primary Markets (½ 29%) • Equity Investments and Investor Services (½ 45%)

Equity Investments and Secondary Markets Primary Markets Investor Services % growth % growth % growth 128

66 62 59 44 44 45 29 11 33 5

2006 FY 2007 FY 2007 H1 2007 H2 2006 FY 2007 FY 2007 H1 2007 H2 2006 FY 2007 FY 2007 H1 2007 H2

10 CORE PERFORMANCE DRIVERS

• Benefits flowing through from business model implementation

• Synergies with Barclays Capital

• Investment in talent

• Investment in organisational infrastructure

• Strong growth in client franchise

• Product innovation

SECONDARY MARKETS

• Full-year revenue growth of 96%

• Performance driven by:

- Increased volumes across existing clients

- Growth in the client base

- Increased derivatisation of the business

- Leveraged strong synergies with Barclays Capital to deliver product and system enhancements across Sales and Trading

• Proprietary trading revenue contribution is insignificant

11 PRIMARY MARKETS

• Full-year revenue growth of 29%

- Excellent growth in fee income of 149% for 2007

• Growth achieved while significantly de-risking the business

• Portfolio implementation to actively manage credit risk and capital

• Client-centric approach with local and international offering

• Led and participated in several of the 2007 landmark transactions

EQUITY INVESTMENTS AND INVESTOR SERVICES

• Full-year revenue growth of 45%

• Equity Investments performed very well with growth driven by:

- Increased deal flow

- Active portfolio management

- Strategic investments in BEE companies which continue to deliver value

• Investor Services continued to deliver solid cash flow

- Retained key mandates and grew the client base

12 OUTLOOK

• Continue to build on the strong platform established over the past two years • Key operational focus areas for 2008 include: - Attracting and retaining the best talent in the market - Growing the client franchise - Driving synergies with Barclays Capital - Investing in world-class systems and support structures • Current market volatility presents both opportunities and challenges • Continue to develop opportunities jointly with Absa Corporate and Business Bank (ACBB), retail banking and other business units

ABSA CORPORATE AND BUSINESS BANK

Robert Emslie

13 THE RESULTS IN BRIEF

• Attributable earnings of R1.9 billion ACBB’s revenue (½ 39%) R million

• Contribution to Group earnings of 19% 6 152

• Return on average equity of 30% 5 168

• Non-interest income contribution of 37%

3 431 • Cost-to-income ratio of 52.7%

Dec 2005 Dec 2006 Dec 2007

CORE PERFORMANCE DRIVERS

• Strong top-line revenue growth

• Quality of book drove lower impairments

• Comprehensive commercial property solutions

• Investment in sales and service capacity

• Large Business profits ½ 42%

• Medium Business profits ½ 30%

14 STRATEGIC INITIATIVES

• New market segment focus

• New product focus

• Building alternative revenue streams

• Specialised focus teams, as well as supportive tools and training for new client acquisition

• Dedicated training capacity

FOCUS ON FIVE TIERS OF STRATEGY

• Expanding on the already established platform for success

• Further diversifying income streams

• Aggressive client and business acquisition

• Expanding client coverage footprint

• Attracting and retaining the best people in the market

• Ready to capitalise on investment-led growth

15 FUTURE PERSPECTIVE

Steve Booysen

CHALLENGING MACROECONOMIC OUTLOOK

• Global economic growth under pressure

• Domestic economic growth to moderate

• Domestic investment-led growth to continue

• But, we are facing some headwinds:

- Ongoing inflationary pressure

- Increasing household indebtedness

- Infrastructure constraints

- Rand volatility

- Electricity crisis

16 OUR LONG-TERM STRATEGIES ARE FORMULATED TO …

• Deliver market leadership

• Enhance our competitiveness

• Diversify our earnings mix

• Improve operational excellence

• Reduce risk

DELIVER MARKET LEADERSHIP AND ENHANCE OUR COMPETITIVENESS

• Protect and entrench leadership in retail banking

- Retain longer-dated anchor products

- Improve customer service

- Promote customer loyalty

• Grow customer numbers and assets through further investment in distribution footprint, embedded products and the Absa brand

- Further expand distribution footprint and channels

- Enhance value proposition of anchor products

- Leverage the Absa brand to grow customers and sell products

17 DIVERSIFY OUR EARNINGS MIX

• Expand emerging middle class market activities - Micro lending, credit cards and retailer finance market • Position Absa as a top-two player in investment, corporate and business banking by 2010 - Grow client franchise, expand market segment focus and accelerate new product areas • Entrench position as leading bancassurer and expand into non-traditional customer base - Expand distribution footprint, improve cross-sell ratio and Absa customer penetration rate and grow assets under management • Optimise existing African operations and seek new profitable opportunities

IMPROVE OPERATIONAL EXCELLENCE AND REDUCE RISK

• Achieve stated cost and process efficiency targets

- Achieve a cost-to-income ratio target of 49.5% by 2009

- Achieve LEAN process automation and efficiency

• Deliver optimal business design to enable us to rapidly respond to future threats and opportunities

- Business, information, application and technology architecture

- Identify threats and take pre-emptive and timeous action

- Identify growth opportunities and invest in future business options

18 ... WHICH INFORMS OUR KEY PRIORITIES FOR 2008

• Growing our customer base

• Attracting and retaining top talent

• Capital management and funding

• Risk management and collections

• Operating efficiency and productivity

ADDENDUM

19 NET INTEREST MARGIN

Percentage Jan 2007 Jan 2006 Net interest margin – opening position 3.30 3.27 Reclassifications (0.02) − Net interest margin – adjusted 3.28 3.27 • Impact of customer deposits (including risk strategies) 0.12 0.00 • Impact of customer advances 0.10 (0.02) • International and African operations 0.02 0.05 • Impact on capital 0.11 0.08 • Impact on preference shares 0.03 0.01 • Investment and trading items (0.16) (0.02) • Interest bearing instruments (0.07) (0.04) • Other (0.06) (0.03) Net interest margin – closing position 3.37 3.30 Dec 2007 Dec 2006

The average prime overdraft rate was 13.11% from January to December 2007 and 11.17% from January to December 2006

CREDIT IMPAIRMENT TRENDS

22.3 19.7 16.4 16.4 14.5 13.7 13.6 13.1 11.2 10.6 11.2

5.2 4.9 5.1 4.3 4.4 3.8 3.3

2.38 2.2 1.8 1.6 1.21 1.3 0.86 1.11 1.09 1.02 0.90 0.58 0.52 0.31 0.45

1998 1999 2000 2001 2002 2003 2004 2005 2005* 2006* 2007* Impairment ratio (%) Non-performing loans and advances ratio (%) Average prime rate (%)

* Year to 31 December Note: 2006 and 2007 statistics adjusted for International Financial Reporting Standard (IFRS) 7

20 NON-INTEREST INCOME

R million %

52.5 53.8 53.8 50.8 50.2 47.9 47.0 43.7 45.0 40.5 16 728 38.8 37.0 15 019 34.1 13 780 12 168 10 753 9 127 7 694 6 421 5 331 4 623 3 879 3 150 2 406 c c c c c c c c c c c 30.9% 23.1% 19.2% 15.3% 20.4% 19.8% 18.6% 17.8% 13.2% 9.0% 11.4%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005* 2006* 2007* Non-interest income (Rm) Non-interest income contribution (%)

* Year to 31 December Note: 2006 and 2007 statistics adjusted for IFRS 7

NON-INTEREST INCOME Year ended 31 December 2007

2007 Mix Change Rm % %

• Net fee and commission income 11 600 69 ½ 14

• Investment income 1 561 9 ¾ 18

• Trading and banking income 1 622 10 ½ 18

• Changes in insurance and investment liabilities (489) (3) ½ 35

• Net insurance premium income 3 192 19 ½ 7

• Net insurance claims and benefits paid (1 603) (9) ¾ 22

• Property-related and sundry income 845 5 ½ 26

Total non-interest income 16 728 100 ½ 11

21 BANCASSURANCE Year ended 31 December

Life insurance 2007 2006 Change % • Gross premium income (Rm) 1 202 1 331 ¾ 10 • Embedded value (Rm) 2 091 2 486 ¾ 16 • Embedded value of new business (Rm) 213 263 ¾ 19 • Embedded value earnings (Rm) 543 762 ¾ 29 • Return on embedded value (%) 21.8 37.2 • Net income after tax (Rm) 524 591 ¾ 11 Short-term insurance* • Gross premium income (Rm) 2 305 1 910 ½ 21 • Loss ratio (%) 62.5 61.7 • Underwriting margin (%) 10.3 12.1 • Solvency margin (%) 83.9 105.7 • Net income after tax (Rm) 537 477 ½ 13

* 2006 numbers restated for structural changes in the Group's short-term insurance operations

BANCASSURANCE Year ended 31 December

Investments 2007 2006 Change % • Assets under management (Rbn) 118 97 ½ 22 • Net flows (excluding money market) (Rm) 7 989 7 477 ½ 7 • Money market net flows (Rm) 8 057 8 971 ¾ 10 • Net income after tax (Rm) 227 200 ½ 14

Fiduciary • Assets under management – Trust (Rm) 5 719 4 980 ½ 15 • Assets under management – Estates (Rm) 2 850 2 249 ½ 27 • Net income after tax (Rm) 98 77 ½ 27

22 SYNERGY TARGETS Ahead of expectations

Synergies Implementation costs R million R million

1 428 1 400 670 670 675 640 1 200

753 750

240 220 211 300

30 67

Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 05 Dec 06 Dec 2007 Dec 08 Communicated targets (Rm) Actual synergies/implementation costs (Rm)

ENHANCED EFFICIENCY Driving a declining cost-to-income ratio

(%)

69.4 67.2 64.7 62.6 62.9 62.3 60.3 60.0 57.1 56.6 57.0 53.8 7.7 51.8 7.3 6.9 7.0 7.2 7.1 7.0 7.2 6.9 7.1 6.7 6.6 6.4 Gap – 2.1 Gap – 3.1 4.8 4.6 4.6 4.5 4.5 4.5 4.4 4.2 4.1 3.9 3.9 3.6 3.3

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005* 2006* 2007* Operating expenditure as a percentage of assets Total revenue as a percentage of assets Cost-to-income ratio * Year to 31 December Note: Only 2006 and 2007 statistics adjusted for IFRS 7

23 POSITIVE GEARING Year ended 31 December

2007 2006 Top-line Operating Cost- Cost- income expenses to-income to-income growth growth ratio ratio % % % % • Retail banking 20 13 55 58 - Segment-focused* 21 16 66 70 - Home loans 20 6 35 40 - Credit cards 15 11 41 42 - Asset finance 11 8 44 45 • Corporate and Business Bank 19 14 53 55 • Absa Capital 51 40 35 38 • African operations 33 25 61 65 • Bancassurance 3 16 36 32 Absa Group 19 15 52 54

* Includes Personal Bank and Absa Private Bank

VALUE CREATED FOR SHAREHOLDERS

cents

1 402

1 182

955# 827 689 560 528 473 377 295 295$ 275 305 314 291 222 178 182 116 116 145 72 86 97 97 59

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2005* 2006* 2007* Headline earnings per share (cents) Dividends per share (cents)

* December statistics # Twelve months pro forma figures $ For the nine months ended 31 December 2005 Note: Only 2006 and 2007 statistics adjusted for IFRS 7

24 DISCLAIMER

This document contains certain forward-looking statements within the meaning of Section 21E of the US Securities Exchange Act of 1934, as amended and Section 27A of the US Securities Act of 1933, as amended with respect to certain of the plans, current goals and expectations of Absa Group Limited (Absa) relating to its future financial condition and performance. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as “aim”, "anticipate", "target", "expect", "estimate", "intend", "plan", “objective", "believe", or other words of similar meaning. Examples of forward-looking statements include, among others, statements regarding Absa’s future financial position, income growth, impairment charges, business strategy, projected levels of growth in the banking and financial markets, projected costs, estimates of capital expenditures, and plans and objectives for future operation. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances including, but not limited to, the further development of standards and interpretations under International Financial Reporting Standards (IFRS) applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS and pending tax elections with regard to certain subsidiaries, as well as South African domestic and global economic and business conditions, market related risks such as changes in interest rates and exchange rates, the policies and actions of government and regulatory authorities, changes in legislation, the outcome of pending and future litigation, the impact of competition, and Absa's ability to increase earnings per share from acquisitions, which may be affected, among other things, by the ability to realise expected synergies, integrate businesses, and costs associated with the acquisition and integration - a number of which factors are beyond Absa's control. As a result, Absa's actual future results may differ materially from the plans, goals, and expectations set forth in Absa's forward-looking statements. Any forward-looking statements made by or on behalf of Absa speak only as of the date they are made. Absa does not undertake to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Absa has made or may make in documents it has filed or may file with South African regulatory authorities including its most recent annual report.

25 Administrative information

CONTROLLING COMPANY

Absa Group Limited (Registration number: 1986/003934/06) ISIN: ZAE000067237 JSE share code: ASA Issuer code: AMAGB

REGISTERED OFFICE SHAREHOLDER CONTACT INFORMATION

3rd Floor, Absa Towers East Shareholder and investment queries about the 170 Main Street, Johannesburg, 2001 Absa Group should be directed to the following areas: Postal address: PO Box 7757, Johannesburg, 2000 Telephone: (+27 11) 350 4000 Group Investor Relations Telefax: (+27 11) 350 4009 Telephone: (+27 11) 350 4061 e-mail: [email protected] Telefax: (+27 11) 350 6487 e-mail: [email protected] SPONSOR Group Secretariat Merrill Lynch South Africa (Proprietary) Limited (Registration number 1995/001805/07) Telephone: (+27 11) 350 6062 (Member of the Merrill Lynch Group) Telefax: (+27 11) 350 4009 138 West Street, Sandown, Sandton, 2196 e-mail: [email protected]

TRANSFER SECRETARIES OTHER CONTACTS

South Africa Group Media Relations

Computershare Investor Services 2004 Telephone: (+27 11) 350 5768 (Proprietary) Limited (Registration number 2004/003647/07) Group Finance

70 Marshall Street, Johannesburg, 2001 Telephone: (+27 11) 350 4650 PO Box 61051, Marshalltown, Johannesburg, 2107

ADR depositary

The Bank of New York 101 Barclay Street, 22W, New York, NY10286, USA

BASTION GRAPHICS